The market will remain under pressure due to factors including the dovish stance of the Fed

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New Delhi: Other adverse factors, including the tough stance of the federal government, have had an adverse impact on the Indian stock market. Given the current conditions, analysts believe that the market will remain under pressure with continued volatility in the future as well.

The US The Federal Reserve has increased the rate by another 75 basis points and the markets are expected to increase by 75 basis points in November, 50 basis points in December and the final 25 basis points in February 2023.

Following the Fed's move, markets are now awaiting RBI's next policy and action on easing liquidity and the current run on currency and declining reserves. Analysts expect the Reserve to hike rates to 50 mage from 35 mage previously and 25 to 25 mage in the December meeting.

If commodity prices remain high in the fourth quarter of FY23, there is upside risk in the forecast. The RBI may raise the rate by 50 bps in 2023 from the previous 75 bps which would take the repo rate to 6.75% by April 2023. RBI's next policy meeting will be held on September 28-30.

Liquidity in the banking system has slipped into deficit for the first time in forty months. To ease liquidity, RBI has announced Rs. 50,000 crore variable rate repo auction was conducted. Analysts said the deficit was an outflow due to increased advance tax and credit demand and slower growth in deposits.Going forward, analysts expect cash demand to remain as the festive season begins.

India's premium value to Asian markets is unsustainable. The BNP Factors report said it was cautious on Indian markets amid a lack of positive catalysts for further earnings upgrades amid sluggish global demand, higher valuations and a slowdown in retail flows. Market returns over the next one year have been muted at high valuation levels of Indian markets and hence caution is warranted.

A number of agencies have downgraded India's economic growth estimates, an issue that has also had an impact on the market.


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