Asian stock markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.7% while the Hang Seng is down 1.2%. The Shanghai Composite is trading down by 0.8%. US stocks declined sharply on Wednesday after the Federal Reserve's forecast of fewer interest-rate increases in 2019 fell short of investors' hopes of a more dovish monetary policy.

Back home, India share markets opened on a negative note. The BSE Sensex is trading down by 172 points while the NSE Nifty is trading down by 47 points. The BSE Mid Cap index opened the day on a flat note while BSE Small Cap index opened up by 0.3%.

Barring realty stocks & healthcare stocks, all the sectoral indices have opened the day in the red with telecom stocks and metal stocks leading the losers.

The rupee is currently trading at Rs 70.58 against the US$.

In the news from the American economy, the US Federal Reserve raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year. It further signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

The central bank said the US economy has been growing at a strong rate and the job market has continued to improve.

It noted that "some" further gradual rate hikes would be needed, a subtle change that suggested it was preparing to stop raising borrowing costs.

The rate hike, the fourth of 2018, lifted the target range for the Fed's benchmark overnight lending rate by a quarter of a percentage point to a range of 2.25% to 2.50%.

The decision to raise borrowing costs again is likely to anger US President Donald Trump, who has repeatedly attacked the central bank's tightening this year as damaging to the economy.

The Fed has been raising rates to reduce the boost that monetary policy gives to the economy, which is growing faster than what central bank policymakers view as a sustainable rate.

The Fed also made a widely expected technical adjustment, raising the rate it pays on banks' excess reserves by just 20 basis points to give it better control over the policy rate and keep it within the targeted range.

How does a US interest rate hike affect Indian investors?

The instant effect is foreign money moving out of India's vaults. This means a slight correction in the share market in India, albeit temporarily.

While this might provide a good buying opportunity in long-term stocks, the main thing to look forward would be capex and earnings trends.

In the end, Indian investors are better off staying informed about the corporate earnings revival than Fed rate hikes.

It is also worthwhile to note that the Indian stock market has done relatively well during the last period of rate hikes by the US Fed.

Take 2003-2006 for example...

Between 2003 and 2006, the US Fed rate moved from 1% to 5.25%.

Sensex's Staggering Performance Despite the Fed Rate Hikes

Despite this, the Sensex rose from 3,500 levels to more than 10,000 during the same period. This increase was supported by strong earnings growth.

So, in the long term, rate hikes (triggered by economic growth) have proved good for the Indian markets.

Moving on to the news from the pharma space. As per an article in a leading financial daily, joint venture proposed by GlaxoSmithKline and Pfizer Consumer Healthcare is poised to become the world's biggest seller of over-the-counter medical products. As per the reports, it may salvage the brands of both companies that are struggling to grow in India.

The top brands in the local market will include Sensodyne, Crocin, Eno, Voltaren, Centrum, Caltrate, Anacin and Anne French.

The combined sales of these products are estimated to be between Rs 10 and Rs 15 billion. Pfizer said it is excluding Corex, Gelusil and Becosules from the JV, having declared earlier that they are to be considered for a strategic review.

GSK and Pfizer said on Wednesday they will merge their consumer healthcare businesses, which have combined sales of US$12 billion, by creating a JV with GSK owning 68% and Pfizer 32%.

The decision comes 10 months after GSK walked out of a deal to buy Pfizer's consumer health business.

Further, GSK clarified that assets within the scope of its proposed divestment of Horlicks and other consumer healthcare nutrition products to Unilever and their proceeds will not be included in the JV with Pfizer.

The deal is expected to deliver cost synergies worth US$650 million.

From the brand point of view, Pfizer will get a much-needed revival through the JV. Pfizer has less brand recall among consumers and is not known for its consumer business in India. Considering GSK in India has stronger brand loyalty among consumers, it has its job cut to take this JV forward, the reports noted.

Pfizer share price & GlaxoSmithKline Consumer Healthcare share price opened up by 1.4% & 0.8% respectively.