The 75 basis point hike by Fed was much expected, then why did the markets react adversely?

• While the market reacted well to the US Federal Reserve's dovish comments overnight, the bounce on D-Street was short-lived. Rate hikes of 75 basis points are expected to continue, according to analysts, and the start of the balance sheet reduction will be detrimental for global markets.

• Powell stated the US policymakers' decision was "an extraordinarily significant one" and that he did not expect "moves of this size to be regular" while boosting the interest rate by 75 basis points overnight, most likely in response to a 40-year high inflation report.

• Domestic indices initially rose by more than 1% each as a result of this.

• Powell did say, though, that his Fed was open to a 50- or 75-basis-point rate hike at the next meeting, implying that a 75-basis-point rate hike was not ruled out.

• In addition, the Fed's plan to reduce its almost $9 trillion balance sheet has begun, with the central bank allowing bonds to mature without being replaced.

• Along with the Fed's first rate raise in 28 years, Powell sent a strong statement that the central bank has the means and determination to achieve price stability. In addition, the Fed is cutting the size of its balance sheet dramatically.

• This has a detrimental impact on equity markets around the world. Any relief rally will most likely be short-lived. The continued sale of FPIs in India is an additional headwind.

• For a moment, a 75 basis point Fed rate hike may appear to be good news, since the abrupt rate hike may make the market assume the worst is over, but "the worst is not over yet."