New Delhi: Equity indices declined on Thursday tracking weak cues from global markets amid a dovish stance by the US Federal Reserve.
The 30-share BSE Sensex closed at 61,799.03, down 878.88 points or 1.4%. During the day, it fell 962.3 points, or 1.53%, to 61,715.61. Whereas, comprehensive nse nifty The stock fell 245.40 points, or 1.32%, to close at 18,414.90.
Top laggards in the Sensex pack included Tech Mahindra, Titan, Infosys, HDFC, ITC, Tata Steel, HDFC Bank, Tata Consultancy Services and State Bank of India. NTPC and Sun Pharma were the only winners.
All sectoral indices fell with IT stocks falling over 2%. This is the biggest fall in both Sensex and Nifty in the last two months.
The main reasons for today’s accident are as follows:
* Hawkish stance by US Fed
US Federal Reserve Chairman Jerome Powell took an aggressive stance and said interest rate hikes would continue for a longer period than the market expected.
The US Fed on Wednesday raised interest rates by 50 basis points on expected lines and signaled more hikes to fight inflation. The US central bank raised the interest rate to 4.25-4.50%, the highest level in 15 years.
Vinod Nair, head of research at Geojit Financial Services, told news agency PTI, “The Fed has surprised the market by maintaining its dovish tone, as investors were expecting a dovish stance after the release of better-than-expected inflation data.” ”
* Fall in global markets
Global stocks fell for a second day on Thursday as major central banks delivered their final policy decisions of the year, after the US Federal Reserve signaled interest rates are expected to remain on hold for a longer period.
In Europe, the Swiss National Bank raised rates by half a point as expected, bringing rates to a 14-year high of 1%.
The dollar, which has lost nearly 7% in value in the fourth quarter, rose 0.5%, despite a fall in Treasury yields that will apparently drag the currency from this week’s six-month low.
In Europe, equities declined and bond yields reached higher levels. STOXX declined 1.2% as heavyweight stocks across sectors sank. Hong Kong’s Hang Seng dropped 1.13% and mainland Chinese blue chips slipped 0.15%.
* IT stocks dragged the market
IT companies are particularly sensitive to changes in the US market, which is their biggest revenue contributor.
Hence, tech stocks were the biggest losers in today’s market crash.
Tech Mahindra was the biggest loser in today’s trade falling nearly 4%, while Infosys slipped 2.5%.
“IT stocks led the pessimism in the domestic market as fears of a slowdown in global economies increased following Fed’s comments. The market now awaits the decisions of BoE (Bank of England) and ECB (European Central Bank), which A half-point hike is likely to follow,” Vinod Nair, head of research at Geojit Financial Services, told PTI.
* Other sectors also ended in the red
Apart from IT, all other sectors also closed in the red. In the broader market, the BSE Midcap gauge declined by 1.05% and the Smallcap index by 0.61%.
“Markets sold heavily on account of US Fed impact as banking, IT, metals and realty stocks offloaded investors,” said Shrikant Chauhan, head of equity research (retail), Kotak Securities Ltd. ,
“Markets were disheartened after the Fed signaled that the rate hike regime would continue into next year, further bolstering an already weak market sentiment, prompting investors to reduce their equity exposures,” he said. ”
* Small Bets
Some market participants also took small bets ahead of the central government’s debt auction on Friday.
The government aims to raise Rs 30,000 crore through bonds, which include the sale of new 14-year bonds.
* Rupee falls
The Indian rupee declined against the American currency on Thursday and forward premium touched this month’s highest on dollar recovery against its major peers and weak Asian cues.
The dollar index climbed 0.6% to 104.28 on the US Federal Reserve’s interest rate forecast and poor risk appetite. Futures pointed to losses in the S&P 500 index, while European and Asian equities declined. Indian equities had their worst day since mid-October.
(with inputs from agencies)
The 30-share BSE Sensex closed at 61,799.03, down 878.88 points or 1.4%. During the day, it fell 962.3 points, or 1.53%, to 61,715.61. Whereas, comprehensive nse nifty The stock fell 245.40 points, or 1.32%, to close at 18,414.90.
Top laggards in the Sensex pack included Tech Mahindra, Titan, Infosys, HDFC, ITC, Tata Steel, HDFC Bank, Tata Consultancy Services and State Bank of India. NTPC and Sun Pharma were the only winners.
All sectoral indices fell with IT stocks falling over 2%. This is the biggest fall in both Sensex and Nifty in the last two months.
The main reasons for today’s accident are as follows:
* Hawkish stance by US Fed
US Federal Reserve Chairman Jerome Powell took an aggressive stance and said interest rate hikes would continue for a longer period than the market expected.
The US Fed on Wednesday raised interest rates by 50 basis points on expected lines and signaled more hikes to fight inflation. The US central bank raised the interest rate to 4.25-4.50%, the highest level in 15 years.
Vinod Nair, head of research at Geojit Financial Services, told news agency PTI, “The Fed has surprised the market by maintaining its dovish tone, as investors were expecting a dovish stance after the release of better-than-expected inflation data.” ”
* Fall in global markets
Global stocks fell for a second day on Thursday as major central banks delivered their final policy decisions of the year, after the US Federal Reserve signaled interest rates are expected to remain on hold for a longer period.
In Europe, the Swiss National Bank raised rates by half a point as expected, bringing rates to a 14-year high of 1%.
The dollar, which has lost nearly 7% in value in the fourth quarter, rose 0.5%, despite a fall in Treasury yields that will apparently drag the currency from this week’s six-month low.
In Europe, equities declined and bond yields reached higher levels. STOXX declined 1.2% as heavyweight stocks across sectors sank. Hong Kong’s Hang Seng dropped 1.13% and mainland Chinese blue chips slipped 0.15%.
* IT stocks dragged the market
IT companies are particularly sensitive to changes in the US market, which is their biggest revenue contributor.
Hence, tech stocks were the biggest losers in today’s market crash.
Tech Mahindra was the biggest loser in today’s trade falling nearly 4%, while Infosys slipped 2.5%.
“IT stocks led the pessimism in the domestic market as fears of a slowdown in global economies increased following Fed’s comments. The market now awaits the decisions of BoE (Bank of England) and ECB (European Central Bank), which A half-point hike is likely to follow,” Vinod Nair, head of research at Geojit Financial Services, told PTI.
* Other sectors also ended in the red
Apart from IT, all other sectors also closed in the red. In the broader market, the BSE Midcap gauge declined by 1.05% and the Smallcap index by 0.61%.
“Markets sold heavily on account of US Fed impact as banking, IT, metals and realty stocks offloaded investors,” said Shrikant Chauhan, head of equity research (retail), Kotak Securities Ltd. ,
“Markets were disheartened after the Fed signaled that the rate hike regime would continue into next year, further bolstering an already weak market sentiment, prompting investors to reduce their equity exposures,” he said. ”
* Small Bets
Some market participants also took small bets ahead of the central government’s debt auction on Friday.
The government aims to raise Rs 30,000 crore through bonds, which include the sale of new 14-year bonds.
* Rupee falls
The Indian rupee declined against the American currency on Thursday and forward premium touched this month’s highest on dollar recovery against its major peers and weak Asian cues.
The dollar index climbed 0.6% to 104.28 on the US Federal Reserve’s interest rate forecast and poor risk appetite. Futures pointed to losses in the S&P 500 index, while European and Asian equities declined. Indian equities had their worst day since mid-October.
(with inputs from agencies)