The markets have been gripped by nervousness, fear and uncertainty ever since the SVB crisis hit the headlines rate hike.

The Federal Reserve has hiked interest rates by 25 basis points. This is in line with expectations from the markets and brokerages. Caught between financial stability and fighting inflation, the Fed has struck a balance. It has reassured the markets with a categorical remark “US banking system is sound and resilient’’.

The Fed also acknowledged the current banking crisis will lead to “tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain”.’ While the U.S. markets were initially excited by the change in language from “ongoing rate increases’’ to “some additional hikes maybe based on incoming data’’ and were taking

The Fed chief began the press conference by saying the banking system is sound, and he emphasized the steps the central bank took to provide liquidity. But he said there is still considerable uncertainty over how much the banking disruptions will tighten lending conditions and slow the economy.

For India, could this be is a very important change but not strong enough to trigger a big bullish shift? Normally, such a policy could lead to short covering rally. Part of this was seen over the last couple of days when banks started rallying. However, the tug of war between the bulls and bears will continue resulting in volatility.