Indian stocks slump as US Fed hikes policy rates; Rupee drops to new low

New Delhi, September 22: Indian stocks marginally declined on Thursday morning in line with weak global cues, following yet another policy rates hike by the US Federal Reserve in its fight against high inflation. However, a dramatic drop was likely cushioned because investors seemed to have already discounted the possibility of US central bank rate hikes. The Sensex was trading at 59,303.96 points, down 152.82 points or 0.26 percent, at 9.33 a.m., while the Nifty was trading at 17,671.95 points, down 46.40 points or 0.26 percent. "The big question from the Indian market perspective is whether India's outperformance will continue in the present global risk off context. Investors can remain optimistic but be cautious since India's valuations are on the higher side," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated. "Financials, capital goods, select autos, telecom and construction-related stocks can be bought on declines," Vijayakumar added. Meanwhile, the Indian currency rupee breached the psychologically crucial 80 mark again, reaching another new all-time of 80.44 against the US dollar against its previous day close of 79.97. Also Read | Police arrest two LeT terrorists in J-K; weapons, hand grenade seized The current strength of the US dollar Index was the reason for this significant depreciation. In the United States, the key policy rate was raised by 75 basis points to 3.0-3.25 percent, the third straight hike of the same magnitude. The US central bank aims to attain maximum employment and inflation of 2% in the long run, and it believes that the current rate hikes in the target range are appropriate. Stocks in the United States plummeted roughly 2% on the news of the rate hike. Consumer inflation in the United States fell slightly in August to 8.3 percent from 8.5 percent in July but remains much above the 2% target. Also Read | Punjab Governor cancels one-day special session called by state govt -PTC News