Powell's Hawkish Comments Breaks D-street's Momentum; Sensex Tanks 715 Pts
Federal Reserve Chair Jerome Powell on Friday broke the momentum that domestic equity indices had gained in the last two days. Powell's hawkish comments weighed on investor sentiment as he signalled that the Fed will have to move more aggressively to counter US inflation. He further informed that a half-point interest rate increase is on the table for next month's policy meeting.
The 30-share pack Sensex fell 714.53 points or 1.23 per cent to close at 57,197.15. Its broader peer NSE Nifty fell 220.65 points or 1.27 per cent to settle below the 17,200 mark.
"Federal Reserve Chairman Jerome Powell affirmed the central bank’s determination to bring down inflation and said that aggressive rate hikes are possible as soon as next month. Powell’s statements essentially meet market expectations that the Fed will depart from its usual 25 basis point hikes and move more quickly to tame inflation that is running at its fastest pace in more than 40 years. Along with the rate hikes, the Fed is expected soon to start reducing the amount of bonds it is holding. The central bank’s balance sheet now stands at close to $9 trillion, primarily consisting of Treasury’s and mortgage-backed securities," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
On the Sensex, most gains were made by M&M, Bharti Airtel, and Maruti, among others, while SBI, HUL, and IndusInd Bank were among the biggest losers.
While on the Nifty50, Adani Ports, M&M, HCL Tech, and ITC made the most gains, while Hindalco, SBI, and HUL were among the biggest laggards. Adani group said it would buy marine services provider Ocean Sparkle for Rs 15.30 billion.
Except power, all other sectoral indices are trading in the red with bank, pharma, metal and realty down 1-2 percent. Broader markets also weakened, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling close to one per cent. Nifty Bank was down 3.8 per cent this week, while Nifty Auto, Oil & Gas, Energy and infra settled with gains.
"Despite tepid market conditions, auto and energy stocks witnessed buying interest. As a result, the auto-index gained over three per cent while the energy index gained over 2.75 per cent. Technically on weekly charts, Nifty has formed a long leg Doji candle which indicates indecisiveness between the bulls and bears. in addition, during the week, after a long time, the Nifty broke the level of 200 days SMA. It also broke the sacrosanct support level of 17000. However, post breakdown it bounces back sharply from the level of 16825, which is the weekly lowest level. After a volatile momentum currently, Nifty is trading near 200 and 50 day SMA," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.
In Asia, shares in Japan, Australia, South Korea, and Hong Kong declined, while that in Shanghai advanced marginally on Friday.
