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Fed Policymakers Taking Steps to Reduce Inflation – Its Impact on the Equity Market

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2 years ago

May 9, 2022

suruchipandey

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As inflation spikes to its highest in four decades in many countries, central banks across the globe are under pressure to increase interest rates faster than anticipated. Increased interest rates impact the overall economy and help reduce inflation. In mid-March 2022, the US Federal Reserve (Fed) raised the interest rate by 0.25% and communicated it would increase it further and more aggressively this year. At an IMF event, the Fed suggested a 50bps rate hike in the May policy review and 75bps hikes in June and July. This triggered a drop in markets across Asia, including in India.

Contents hide

1 Inflation and rate hikes

2 Impacts of Fed’s interest rate hike on the equity market

3 Themes to beat the Fed rate hike in India

Inflation and rate hikes

Central banks take corrective measures such as changing interest rates to adjust money supply and increase the value of money by keeping inflation under control; this supports the economy. If a central bank increases the interest rate, it aims to raise borrowing costs so that consumers are less likely to borrow and spend money. They are encouraged to save money. This results in reduced inflation because lower demand reduces the prices of products and services. GDP also shrinks as exports become more expensive and, thus, concentrated, and imports become cheaper and record an increase.

Impacts of Fed’s interest rate hike on the equity market

The market becomes more volatile as it witnesses more selling transactions.
Interest rate hikes can negatively impact the stock market, and continuous hikes may lead to recession. If inflation does not decline with the Fed’s interest rate hike, it would have to raise rates further.
With such a rise in market interest rates, both businesses and consumers cut back on spending. Companies are less likely to invest in business expansion. This impacts their stock and, thus, the stock market.
Interest rate hikes will likely reduce the flow of money in the financial system. It makes borrowing more expensive, and the cost of operating a business rises. Hiked interest rates tend to reduce a company’s capital, making it more challenging to borrow, reducing investments and productivity. Over time, it would reduce company earnings, affecting growth rates and reducing stock values.

It is clear that interest rates and the stock market share an inverse relationship.

As a general rule of thumb, reduced interest rates cause the stock market to rise, and an increase leads to a decline in the market. However, this is not a guaranteed market reaction to interest rate change.
The history of rate hikes shows that the stock market is poised to experience high volatility, but this does not mean the market will become bearish. We note that the S&P 500 was higher during the Fed’s previous eight rate hikes. Thus, equity markets may decline before or near the first rate hike, but start to stabilise afterwards.

Themes to beat the Fed rate hike in India

One aspect that brings positivity to the Indian stock market is Russia’s exclusion from the MSCI Emerging Markets Index and the slowdown in China. These lead to more inflows for Indian large-cap stocks. With the exclusion of Russia’s “uninvestable” stocks from widely tracked indices, India’s weight has increased, increasing flows in Indian large caps. Economists and analysts with leading equity research services expect the current slowdown in China to also lead to inflows to India.
A formalisation of the economy would also improve the earnings of most businesses shifting from the unorganised to the organised sector; these include companies in the banking sector and steel and pipe companies.
Sectors that drive business growth could also help, such as IT services, infrastructure and housing CAPEX, and automation.

Most leading portfolio managers, working with leading equity research service providers, focus on companies with strong financials and management teams to reap the most benefits. They recommend investing in the following stocks in the current scenario:

Infosys consistently raised revenue, For FY23, it has posted revenue guidance of 13-15%, higher than market expectations
Titan – shifting from the unorganised to organised sector
SRF – expanding into newer and more complex fields such as fluoro-chemicals
State Bank of India
Asian Paints and Pidilite Industries recovered at a higher CAGR despite increased crude oil prices.

This is all about the impact of increased interest rates.

Acuity Knowledge Partners’ highly qualified equity research analysts (such as CFAs and CPAs) provide equity research services to global investment managers and research analysts . They and data experts offer advanced research insights across sectors and customised equity research services leveraging advanced technology (such as its BEAT suite of automation tools) for clients to find new investment opportunities with expanded coverage and stay abreast of the industry.

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suruchipandey

Hi there! This is Suruchi Pandey. I am a Self-employed, Working Professional. I love to Blogging, Creative Art, Photography, Reading, Others.

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Good Food Gift Cards: A Savory Surprise for Every Occasion

Published

2 hours ago

November 30, 2023

kishwarseo

Post Views: 9

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In a world filled with myriad gifting options, finding a present that strikes the right chord can be challenging. Enter the realm of good food gift cards — a delectable solution that not only satisfies taste buds but also adds a dash of excitement to any celebration.

Imagine receiving a gift that opens the doors to a culinary adventure, allowing you to savor the finest dishes from your favorite restaurants. That’s the magic of a good food gift card. These little cards are more than just a piece of plastic; they are gateways to delightful gastronomic experiences.

Versatility of Good Food Gift Cards

One of the key attractions of good food restaurant gift cards is their incredible versatility. Whether your recipient is a sushi enthusiast, a pizza lover, or someone with dietary restrictions, there’s a card to suit every palate. From exotic cuisines to comfort foods, the options are as diverse as the people receiving them.

Unlike traditional gifts that may or may not align with the recipient’s tastes, good food gift cards offer unparalleled convenience. The recipient has the freedom to choose when and where to enjoy their meal, making it a gift that fits seamlessly into their lifestyle.

Conclusion

In conclusion, good food gift cards stand out as a thoughtful and versatile gift option. From the joy of receiving a personalized message to the excitement of exploring diverse cuisines, these cards add a special touch to any occasion. So, the next time you’re pondering over the perfect gift, consider the savory surprise of a good food gift card.

FAQs

Are good food gift cards suitable for all occasions?
- Absolutely! Whether it’s a birthday, anniversary, or a simple celebration, good food gift cards add a delightful touch to any occasion.
How do I choose the right restaurant for the recipient?
- Researching the recipient’s preferences and reading reviews can help you make an informed decision.
Can I include a personalized message with the gift card?
- Certainly! Most good food gift cards allow you to add a special message, adding a personal touch to your gift.
What should I consider when choosing between digital and physical gift cards?
- Consider the recipient’s preferences and the convenience factor. Digital cards are instant, while physical cards add a tangible charm.

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The next 8 things you should do for profitable gaming site success

Published

10 hours ago

November 30, 2023

kagekhaden

Post Views: 14

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Keuntungan sehari-hari sebuah klub bergantung pada berbagai hal – mereka adalah organisasi seperti organisasi lainnya dan ada yang dijalankan dengan baik dan ada yang tidak begitu baik. Klub perjudian benar-benar kehilangan segalanya sesekali, semua hal dipertimbangkan!

Namun dengan melihat laporan keuangan dari salah satu pertemuan klub terbesar, kita bisa mengetahui keuntungan yang diperoleh klub terpopuler setiap hari. Salah satu laporan ini memuat jumlah rata-rata yang dikeluarkan oleh tamu klub pada umumnya di sebuah klub.

Variabel lainnya adalah pandemi Covid. Hal ini sangat merugikan klub konvensional namun tidak berdampak serupa pada klub judi online. Kami akan melihat sekilas pendapatan pada tahun 2019 agar angkanya tidak terpelintir oleh peristiwa ini.

Klub Daring

Slot Menang123 adalah pengelola klub judi online terbesar di dunia. Mereknya antara lain PokerStars, PaddyPower, dan Betfair.

Sebagian besar pendapatannya berasal dari taruhan olahraga: pada tahun 2019, mereka menghasilkan pendapatan sebesar £2,14 miliar ($2,95 miliar), yang mana 77% berasal dari olahraga dan 23% sisanya dari permainan klub. Keuntungannya sebelum dikenakan biaya adalah £136 juta ($187 juta), naik sekitar 6%. Dengan memperluas kontribusinya, klub online menciptakan keuntungan yang dapat diandalkan.

Ini berarti Ripple mendapat keuntungan rata-rata sebesar £370.000 setiap hari pada tahun 2019 atau sekitar 1.000.000 dolar. Tentu saja, hal ini tersebar ke berbagai tempat – namun sangat bagus, karena ini hanya berasal dari taruhan.

888 adalah administrator taruhan online besar lainnya, namun mereka lebih banyak berlatih dalam permainan klub perjudian daripada taruhan olahraga. Pada tahun 2019, mereka memiliki pendapatan sebesar $530 juta, terdiri dari $441 juta dalam permainan klub online dan $90 juta dalam taruhan olahraga. Tunjangan tahunan mereka pada tahun 2019 adalah $45,3 juta – tunjangan harian pada umumnya sebesar $0,12 juta.

Klub Perjudian Berbasis Darat

Klub perjudian berbasis darat pada umumnya lebih menguntungkan daripada klub perjudian online. Kita harus memeriksa beberapa model.

Las Vegas Bellagio mungkin adalah salah satu kasino paling terkenal di dunia. Itu dimiliki oleh MGM Gathering, yang juga mencakup delapan kasino berbeda di Las Vegas, serta berbagai kasino lainnya di seluruh AS dan Tiongkok.

Berdasarkan laporan tahunan MGM tahun 2019, Bellagio memperoleh keuntungan pra-biaya sebesar $465 juta. Itu adalah manfaat normal $1,27 juta setiap hari.

Di ujung skala yang lain adalah MGM Springfield di Massachusetts. Ini menghasilkan keuntungan tahunan sebesar $34 juta, keuntungan harian normal hanya di bawah seratus ribu dolar. Masih tidak terlalu menyedihkan mengingat baru dibuka akhir-akhir ini.

Klub berbasis darat yang paling menguntungkan ada di Makau, Cina. Lihatlah Venetian Macao: manfaat pra-biaya sebesar $1,4 miliar dolar pada tahun 2019, atau manfaat normal sebesar $3,85 juta setiap hari. Menang123 Venetian Macao dimiliki oleh Sands Gathering dan merupakan klub judi terbesar kedua di planet ini.

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