Mumbai: The BSE Sensex fell 879 points while the NSE Nifty fell below the 18,415 mark on Thursday, in tandem with a global sell-off after the US Federal Reserve raised interest rates and signaled more hikes in its fight against inflation. A depreciating rupee added to the gloom, traders said. Reversing its two-day winning streak, the 30-share BSE Sensex gained 878.88 points or 1.40 percent to end at 61,799.03. The broader NSE Nifty fell 245.40 points or 1.32 percent to end at 18,414.90.
“The Fed surprised the market by maintaining its hawkish tone, as investors expected a softer approach following the release of better-than-expected inflation data.” IT stocks led to pessimism in the domestic market as fears of a recession in global economies rose following the Fed’s comments. The market now awaits the BoE (Bank of England) and ECB (European Central Bank) decisions, which are likely to follow a half-point hike,” said Vinod Nair, head (research) at Geojit Financial Services.
“The US Fed effect led to a massive sell-off in markets as banking, IT, metals and real estate were all hit by investors.” “Markets were disappointed after the Fed hinted that the rate hike regime would continue next year, adding to the already fragile market sentiment that prompted investors to reduce their equity exposure,” said Shrikant Chouhan, Head of Equity Research (Retail ), Kotak Securities Ltd.
Foreign institutional investors (FIIs) were net buyers on Wednesday as they bought stocks worth Rs 372.16 crore, according to stock exchange data.
In the broader market, the BSE midcap gauge was down 1.05 percent and the small cap index was down 0.61 percent. Among sectors, IT fell by 2.06 percent, followed by teak (1.92 percent), metal (1.82 percent), consumer durables (1.37 percent), services (1.28 percent), relations ( 1.25 percent), financial services (1.19 percent), bankex (1.18 percent) and goods (1.17 percent).
Tech Mahindra was the biggest laggard among the Sensek components, down 3.98 percent, followed by Infosys, Titan, HDFC, ITC, HDFC Bank, Tata Steel and TCS. Only Sun Pharma and NTPC managed to close in the black with gains of 0.08 percent. The US Fed on Wednesday raised interest rates by 50 basis points on expected lines and hinted at more hikes to fight inflation, even as the world’s largest economy stares at a possible recession. The US central bank raised the interest rate to 4.25-4.50 percent, the highest level in the last 15 years.
Elsewhere in Asia, stock markets in Seoul, Tokyo, Shanghai and Hong Kong ended lower. Stocks in Europe were trading in the red in mid-session business. US markets ended in negative territory on Wednesday.
Oil and gas finished higher. The international reference price of Brent oil decreased by 0.77 percent to 82.06 dollars per barrel. The rupee depreciated by 27 paise to close at 82.76 (provisional) against the US dollar.