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Fed Rate Hike Jitters Send Sensex Crashing 444 Points

Investors feared that a possible rate hike by the US Federal Reserve as early as next week could reverse dollar flow into the country, leading to fall in banking as well as metal stocks

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Markets received severest drubbing since June on Monday with the Sensex plunging 444 points to a two- week low of 28,353.54, while the NSE Nifty cracked below the 8,800-mark, tracking global meltdown after US rate hike fears resurfaced.

Caution also prevailed ahead of key macroeconomic data - IIP for July and retail inflation for August - scheduled to be released after the market closing on Monday.

The broader markets too remained under pressure, with the BSE mid-cap index slumping 2.95 per cent - its biggest fall in six months - and the small-cap shedding 2.35 per cent.

However, when all the sectors fared poorly, only BSE IT and Tech indices managed to keep their heads up, logging gains of 0.87 per cent and 0.26 per cent, respectively. This uptick was fuelled by buying in Infosys, TCS and Wipro, which were three of the only four stocks on the BSE to rise.

Investors feared that a possible rate hike by the US Federal Reserve as early as next week could reverse dollar flow into the country, leading to fall in banking as well as metal stocks.

Tata Steel was the biggest loser from the Sensex pack on the day - dropping 5.30 per cent to Rs 373.60 - when it also reported widening of losses.

"Global liquidity was a very important factor for the uptick in Indian market which has been put in question by Fed and ECB, leading to a sharp spike in global bond yield," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial.

The Sensex opened lower at 28,481.09 and dropped further to 28,251.31 before ending at 28,353.54, showing a fall of 443.71 points or 1.54 per cent. The index had dropped by 604.51 points on June 24 due to Brexit fallout.

The NSE Nifty fell sharply by 151.10 points or 1.70 per cent to 8,715.60 -- its biggest fall since June 24.

Currency market was also hit hard, with the rupee down 25 paise against the US currency during the day.

Asian and European stocks declined as sentiment was rattled by concerns that the US Fed could be considering an imminent interest rate hike. Key indices in Asia like China, Hong Kong, Japan, South Korea and Taiwan fell by 1.18 per cent to 3.36 per cent.

European indices in France, Germany and the UK fell by up to 2 per cent. Meanwhile, US futures trading indicated that the Dow Jones Industrial Average could slide 116 points at the opening bell.

Back home, 26 scrips out of the 30-share Sensex pack ended lower.

Biggest losers included Adani Ports (4.37 pc), SBI (4.28 pc), L&T (3.68 pc), NTPC (3.56 pc), Axis Bank (3.42 pc) Tata Motors (3.29 pc), M&M (3.06 pc), Hero MotoCorp (2.61 pc), Bajaj Auto (2.60 pc), ITC (2.49 pc) and GAIL (2.39 pc).

While, Infy rose by 1.74 per cent followed by Reliance 0.28 per cent, TCS 0.28 per cent and Wipro 0.14 per cent.

Among BSE sectoral indies, realty fell by 5.23 per cent followed by metal 4.34 per cent, capital goods 3.25 per cent, power 3.14 per cent, industrial 3.05 per cent, utilities 2.95 per cent and auto 2.61 per cent.

The market breadth remained negative as 2,031 shares ended lower, only 689 closed higher, while 174 ruled steady.

The total turnover fell to Rs 3,428.93 crore from Rs 3,569.44 crore on Friday.

Both the stock exchanges, BSE and NSE, will remain closed tomorrow on account of Eid-ul-Zuha.


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