The Federal Reserve, which is the central bank of the USA, has increased interest rates by 75 basis points to a range of 3.0-3.25%. This is the highest increment since the year 2008. The aim of the Fed in increasing the interest rate was to strengthen the dollar and curb inflation, which is at an all-time high in the US.
The impact of this has been negative for mutual funds in India.
There has been a strong outflow of capital from Indian markets to the US as the dollar continues to strengthen. This has led to the weakening of the rupee. Presently, investors are looking at US assets as they are providing better returns. Let’s look at more details regarding this situation!
The aggressive rate hike by the US Federal Reserve has impacted the Indian mutual fund sector. The Indian equity markets have been negatively impacted as foreign investors continue to pull out their investments from India, preferring the more established markets of the USA to India.
The key Indian equities markets plunged for the third straight day as Sensex and Nifty 50 fell 337.06 points and 88.55 points respectively. Moreover, the Indian rupee when compared to the US dollar has slipped to Rs. 80.86.
However, in India, inflation is moderately in control and the crude prices will soften in the future. According to experts, this means the rate cut by India’s central bank may begin to start in the financial year 2024.
Equity mutual funds are likely to experience some volatility. As foreign investors pull out of the Indian markets, equity is going to see some volatility down the line. Furthermore, India has increased its interest rates. This means that debt securities are witnessing a high sell-off. This sell-off is likely to witness a lull soon enough.
So if you are looking to invest in debt mutual funds the horizon should be for at least 3-5 years. Moreover, experts say that the investment in debt mutual funds like liquid and short-term money market funds is also a good option.
To know how to invest in mutual funds in India you can get in touch with Money Assist.
Money Assist is one of Kolkata’s leading mutual fund agents. It is a company that maintains a vast portfolio of several local clients. If you are keen to invest in mutual funds in India opt for investment through Money Assist.
Furthermore, you can contact us to know how to invest during this period of volatility. We help you appreciate your capital even during a volatile phase of the market.
Hence, get in touch with us today!
