US Fed interest rate decision key event to watch out for this week: Analysts

Stock markets would take cues from the biggest event of the week — the US Fed interest rate decision, besides tracking the trends in global markets and trading activity of foreign investors, analysts said.

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Last week, a heavy decline in smallcap, midcap firms, foreign fund outflows and elevated crude oil prices in the international market dented investors’ sentiments.

Experts said equity markets may remain volatile in the near-term amid a host of global central bank’s monetary policy decisions lined up during the week.

“This week will place a significant focus on monetary policy, as the Fed will begin its two-day policy meeting on March 19. The US Federal Reserve will announce its interest rate decision after its two-day policy meeting on March 20, 2024,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

Additionally, China will announce the loan prime rate for 1-year and 5-year loans and the Bank of Japan (BoJ) will announce its interest rate decision on March 19, 2024. Japan will also announce the inflation rate on March 22, he said.

“The movement of the rupee against the dollar, the US bond yields and crude oil prices will remain in focus,” Gour added.

Last week, the BSE benchmark tanked 1,475.96 points or 1.99 per cent, while the NSE Nifty declined 470.2 points or 2.09 per cent.

The BSE smallcap index dropped 2,640.82 points or 5.91 per cent and the midcap gauge tumbled 1,602.41 points or four per cent.

With uncertainty around, local investors will closely follow global markets to decide on their exposure to equities, Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

“This week will be important from an economic perspective as major central banks globally including Japan, the US and the UK will announce interest rate decisions. The US Fed policy outcome and commentary will be important, as mixed set macro data has kept investors anxious over the rate cut timeline.

“Thus, we expect the market to remain volatile in the near-term with a focus on largecaps and defensive names,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd, said.

Investors’ focus would now also shift to the upcoming Lok Sabha polls.

The Lok Sabha polls will be held in seven phases spread over 44 days starting April 19 in the world’s largest election. Counting of votes will be taken up on June 4.

Also read: Fed’s Powell still expects rate cuts, but inflation progress “not assured”

“The week ahead, the global central bank’s monetary policy decision will get investors’ attention. The US Fed, BoJ and BoE (Bank of England) will unveil their rate decisions,” said Vinod Nair, Head of Research, Geojit Financial Services.