Indian Benchmark Indices Turn Negative For The Year, Sensex Sheds 1,000 Pts

Indian benchmark indices fell nearly 2 per cent on Friday and turned negative for the year on fears that an aggressive US Federal Reserve would trigger foreign fund outflows, while financial stocks slid after the Reserve Bank of India (RBI) barred Mahindra Group's financial services arm from using third-party agents to recover loans.

The rupee also touched a new record low in opening trade as it hit 81 against the US Dollar. RBI's likely intervention in the market arrested the slide to some extent but still the Indian currency closed at it weakest against the greenback at 80.99, as per Bloomberg Data.

The NSE Nifty 50 index fell 1.72 per cent at 17,327.35, while the S&P BSE Sensex dropped 1.73 per cent to 58,098.92.

Both the indexes fell over 1 per cent this week and have erased gains made so far this year.

"Indian equity markets witnessed a sharp fall on week end due to weak global cues. We were outperforming but the level of 112 in the dollar index and the level of 81 in USD-INR spooked the market sentiments.  FIIs have started selling again in the Indian equity market therefore we are seeing selling pressure in large-cap stocks. Global markets are nervous after the 75-basis rate hike and hawkish commentary by the US Fed," said Santosh Meena, Head of Research, Swastika Investmart.

Foreign investors net sold USD 152 million worth of Indian equities this week as of Thursday, after buying net USD 819 million worth last week, Refinitiv Eikon data showed.

"With the latest round of interest rate tinkering by the US central bank, investors have turned risk averse and are dumping shares at will. Traders are also worried about the escalation in Russia-Ukraine conflict, which is prompting them to exit equities and park funds in safe haven dollar assets," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.

The Nifty bank index fell 2.7 per cent, while the finance index dropped 2.5 per cent.

Shares of Mahindra and Mahindra Financial Services fell 13.1 per cent after the Reserve Bank of India directed the company to stop using third-party services for loan recovery until further orders.

Shares of Power Grid Corporation of India fell 8 per cent, and was the top loser in Nifty 50 index, while Indian pharmaceutical company Divi's Laboratories was the top gainer, rising 1.8 per cent.

"Technically, the Nifty has formed a lower top formation on daily charts and long bearish candle on daily charts which is broadly negative. For positional traders 17,500-17,600 levels could act as a crucial resistance zone. On the flip side, the 50-day SMA or 17,250 would be the important support level. If the index closes below the 50-day SMA, it could retest the level of 17,150 and could retreat further till the 200-day SMA or 17,000," said Athawale.

(With inputs from Reuters)