India unmoved by Fed move, Sensex, Rupee gain
India’s markets shrugged off the long-dreaded rate hike by the US Federal Reserve with the benchmark BSE Sensex vaulting 1.2% to close 309.41 points up at 25,803.78 on Thursday.business Updated: Dec 17, 2015 23:38 IST
India’s markets shrugged off the long-dreaded rate hike by the US Federal Reserve with the benchmark BSE Sensex vaulting 1.2% to close 309.41 points up at 25,803.78 on Thursday.
The rupee mirrored the trend gaining 31 paise to close at 66.42 against the dollar, contrary to fears that the local currency would take a beating.
The NSE Nifty closed 93.45 points, or 1.2%, up at to 7844.35 points.
The US Federal Reserve on Wednesday raised its benchmark short-term interest rates by 0.25%, after keeping it around zero since the start of the financial crisis in 2008.
India has been watching developments on this front closely. RBI governor Raghuram Rajan said last week he was expecting a hike of around 0.25 percentage points.
It is also better prepared than it was in 2013 when the rupee got mauled in the worldwide turmoil triggered imminent fears about a coming hike.
Chief economic adviser Arvind Subramanian said that the rate hike was in line with global expectations and its impact on India will be “very minimal” due to strong macroeconomic conditions. “This rate hike was widely anticipated, so I think markets should have priced this in and there shouldn’t be much of an impact of this per se (on markets),” he told reporters.
“We are really well cushioned. Inflation is coming down, fiscal deficit situation is very good, external situation is also robust. So, I think for all these reasons, impact on India would be very minimal,” he added.
“The impact (rate hike) will happen depending upon what it signals about the future rate hikes. I think that is still a little bit open. Let’s wait,” Subramanian said.