Fed Rate hike? What will happen?

The answer is nothing.

Markets are spooked globally as the Fed suddenly announced a 25 basis point hike in the discount rate. Futures around the world collapsed on the news and our very own Nifty opened about 1.2 % down. So is this the end of the road for this rally?

Let's understand what the Fed has done. Literally nothing to warrant such a reaction in stock prices. The discount rate is the rate at which banks borrow from the Fed. Post stimulus, very few banks borrowed and infact many have returned the money back. Very few banks are likely to borrow from the Fed now, hence the rate hike is insignificant.Infact they have been talking about this hike for the past several weeks and the possibility to increase rates by 25 basis points in May/ June.

Most likely we will see higher prices in 3-4 days.It's time to buy this dip.