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Analysts at Goldman Sachs wrote in a note late Thursday that the
expected path of interest rates by the central bank is now
higher than its previous estimate. Their previous target was
4,300 points.
The benchmark index last closed at 3,758 points.
"Based on our client discussions, a majority of equity investors
have adopted the view that a hard landing scenario is inevitable
and their focus is on the timing, magnitude and duration of a
potential recession and investment strategies for that outlook,"
wrote Goldman analyst David Kostin.
The Fed indicated on Wednesday global policymakers would "keep
at" their battle to beat down inflation, and hiked U.S. interest
rates by 75 basis points for a third consecutive time and
signaled borrowing costs would keep rising this year.
Kostin noted inflation has proved more persistent than expected
and is unlikely to show clear signs of easing in the near term,
leading to even higher estimates of Fed tightening.
Monthly U.S consumer prices had unexpectedly risen in August.
"Most portfolio managers believe that in order to corral
inflation the Fed will have to hike rates sufficiently high that
it will result in a U.S. recession at some point during 2023,"
he added.
Earlier this month, UBS cut its 2022 year-end target for the S&P
500 to 4,000 points.
(Reporting by Aniruddha Ghosh in Bengaluru; Editing by Anil
D'Silva and Krishna Chandra Eluri)
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