Equity Benchmarks End Lower Amid Rate Hike Fears
Indian equity benchmark indices ended lower on Thursday ahead of key US inflation data for September, due later in the day and fears of continued aggressive rate hikes by central banks.
India's retail inflation also accelerated to a five-month high in September as food prices surged, remaining above the Reserve Bank of India's target for three quarters and raising fears of further interest-rate hikes.
The minutes of the September Federal Open Market Committee (FOMC) meeting indicated that the pace of rate hikes is not going to slow down in the near future.
“Participants judged that the Committee needed to move to, and then maintain, a more restrictive policy stance in order to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the meeting summary stated.
Investors also took into account the International Energy Agency’s (IEA) warning where it stated that the recent OPEC+ oil supply cuts could tip the world into recession.
At Close, the Sensex was down 390.58 points or 0.68 per cent at 57,235.33, while its broader peer, the Nifty was down 109.30 points or 0.64 per cent at 17,014.30.
Except metal and healthcare, all other sectoral indices ended in the red.
"Markets continued to witness a tumultuous ride as weak Asian cues came as a dampener although positive European markets helped temper the fall. The gloomy mood due to global economic uncertainty has precipitated the fall in recent sessions. Banking stocks bore the brunt of the overall pessimism on concerns rising interest rate regime could hit demand for loans," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
On the Nifty, Wipro, Adani Ports, SBI, SBI Life Insurance and L&T were among the top Nifty losers.
HCL Tech, Sun Pharma, Coal India, Britannia and Tata Motors were the top gainers.
Shares of Wipro fell nearly 7 per cent on Thursday after it missed quarterly profit estimates and forecast weak revenue growth.
Adani Ports & SEZ ended 2.29 per cent lower. The Supreme Court of India on Thursday set aside an order passed by the Gujarat High Court that had permitted Adani Ports SEZ for the acquisition of approximately 30 acres of land near Mundra Port pertaining to which a dispute had been raised by Warehousing Corporation which had laid its claim to it.
Asian Markets also fell during the day on rate hike fears. Japan’s Nikkei 225 fell 0.60 per cent, South Korea’s Kospi plunged 1.80 per cent, and Hong Kong’s Hang Seng declined 1.87 per cent.
On the technical outlook, Chouhan said that he Nifty is consistently taking support near the 200-day SMA (Simple Moving Average) or 16,950 while facing strong resistance at 17,150.
"A sharp correction wave is possible if the index trades below 16,950 and on further decline, it could slip till 16,800-16,700," he added.
