Have the Indian markets rallied too fast, too soon?

Indian frontline benchmarks – the S and P BSE Sensex and the Nifty50 – have rallied around 12 per cent each since June-end and outperformed their global peers by a wide margin. On Thursday, the US Fed hiked interest rates by another 75 basis points (bps) – the third such hike this year – and surprised the markets by projecting further sizable hikes in the coming months. With the latest hike, the Fed fund rate (FFR) now stands in the range of 3 – 3.25 per cent and is highest since January 2008.