After losing 192 points, or 3.20 per cent, at 6,154.44 last week amidst rate hike fears, FII outflows and some poor corporate results like Hindustan Lever, the market is expected to trade cautiously this week as investors keenly await the outcome of the key Federal Reserve meeting early next week. The usual factors — oil prices and foreign fund flows — would also determine the trend of the market.The market is worried that interest rates in India will now go up. Last week, RBI hiked the reverse repo rate in the credit policy, signalling a rate hike. The US Federal Reserve is meeting next Tuesday to discuss monetary policy and is widely expected to boost rates by a quarter-percentage point to 3 per cent. However, of more interest to investors will be what the bankers hint at in the statement. ‘‘Any rise in US interest rates will have its impact here. FII inflows will slow down further,’’ said a BSE dealer.The trend in the US interest rates are crucial for markets across the globe, including India. Foreign funds — mostly from the US — have put in huge money in the emerging, including Indian markets, in the last couple of years, as US interest rates have remained extremely low.However, with recent hikes in the US interest rates, there has been a significant reversal in the foreign fund flows to the emerging markets, including India. Foreign funds pulled out Rs 501.70 crore in the first four sessions of the week. After making huge purchases in the first three months of the year, FIIs have turned net sellers in April, having already sold shares worth of Rs 654.10 crore so far.
