Indian Equities Slump As Fed's Hawkish Commentary Spooks Market
Indian equities saw a massive sell-off on Thursday as investor sentiment took a severe hit after overnight hawkish commentary from the US Federal Reserve that the fight against inflation is far from over.
The 30-share Sensex slumped 878.88 points or 1.40 per cent to close at 61,799.03 while its broader peer, the Nifty50, declined 245.40 or 1.32 per cent to settle at 18,414.90.
The US Federal Reserve raised interest rates by half a percentage point, which the investors had expected but also projected an additional 75 basis points of increases in borrowing costs by the end of 2023. It also projected a rise in unemployment and near stalling of economic growth.
The Fed’s projection of the target federal funds rate rising to 5.1 per cent in 2023 came in slightly higher than investors had expect
“The US Fed effect led to a massive sell-off in the markets as banking, IT, metal & realty stocks received severe pounding at the hands of investors. Markets were disappointed after the Fed indicated that the rate hike regime would continue next year, which further accentuated the already fragile market sentiment prompting investors to trim their equity exposure,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
On the Sensex, Tech Mahindra, Infosys, Titan, HDFC, ITC were the top losers, slumping between 2-4 per cent.
Others which closed with cuts included Tata Steel, HDFC Bank, TCS, SBI, ICICI Bank and Nestle.
Only NTPC and Sun Pharma closed the day with gains on the 30-share pack.
Among sectors, the Nifty IT plunged 2.14 per cent while Nifty PSU Bank dropped 2.10 per cent. Nifty Financial Services and Nifty Metal also closed lower.
In the broader market, Nifty Midcap50 fell 1.20 per cent.
Broader Asian and European markets also reacted to Fed’s outlook and commentary. Japan’s Nikkei, Hong Kong’s Hang Seng, China’s Shanghai, Australia’s ASX 200, South Korea’s Kospi slipped nearly 1.5 per cent during the day.
Germany's DAX, Netherlands' AEX, UK's FTSE100 and France's CAC40, were down between 1-2 per cent during intraday trade.
"Technically, Nifty witnessed lower highs with closing below 20-DMA with big red bar which is a bearish sign however 18,325-18,250 is an immediate support zone that bulls will try to protect. 18,100 and 18,000 will be the next important support levels," said Santosh Meena, Head of Research, Swastika Investmart
"On the upside, 20-DMA of 18,530 will now act as a key hurdle; above this, the bearish setup will nullify and market may resume its bullish momentum. 18,730/18,800/18,888 will be the next resistance levels," he added.
