Bears Take Control Of D-street Amid Powell's Hawkish Tone
The Indian stock market closed with deep cuts on Monday in what was the first session after Fed Chair Jerome Powell’s Jackson Hole Symposium speech in which he signalled aggressive rate hikes for some time to tame inflation.
His promise of policy pain to contain inflation quashed hopes of investors who were anticipating that the Fed would go easy on rate hikes and soften its stance to prevent an economic slowdown.
At close on Monday, the 30-share Sensex slumped 831.25 points or 1.46 per cent to 57,972.62 while its broader peer the Nifty shed 246 points or 1.40 per cent to settle at 17,312.90.
"Investors had already got the wind of bearish undertone for the start of the week, after the US Fed chairman's speech on Friday talked about further rate hikes going ahead to tame inflation. And as expected, Sensex crashed nearly 1,500 points in early trades before recovering some ground to close off its day's low. Traders are expecting more bouts of volatility in coming sessions on concerns that continuation of rate hikes in the US could pose a threat to the global economy and hurt growth prospects," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
On the Nifty Britannia Industries, Maruti Suzuki, Apollo Hospitals, Nestle India and Asian Paints were among the top gainers while Tech Mahindra, Infosys, Wipro, HCL Technologies and TCS were among the major Nifty losers.
"Markets witnessed a sea of red at Dalal Street as Fed chose inflation flight over growth. The Nifty plunged and ended deep in red as bears were seen in total control after Jerome Powell at his Jackson Hole appearance mentioned that interest rates may continue to rise to combat inflation. Powell also stated that failure to restore price stability would mean far greater pain," said Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities.
"Technically speaking, the Nifty line on the sand is at the 17161 mark. Nifty‘s major support is at 17161 mark and below the same, the next big support is at 16911 mark. For Tuesday’s session, Nifty’s major hurdle is seen at 17507, while buying is advised only above the 17757 mark," Tapse added.
