Equity Benchmarks Tumble Amid Weak Global Cues

It was a bear hug all over the Indian stock market on Monday as benchmark equity indices ended with deep cuts for the fourth straight session amid weak global cues. Investor sentiment dwindled as the Federal Reserve’s resolve to tame inflation with aggressive rate hikes till December 2022 stoked fears of an imminent recession.

At close, the Sensex ended 953.70 or 1.64 per cent lower to settle at 57,145.22, while its broader peer, the Nifty, ended 1.80 per cent or 311.05 points down to end at 17,016. The indices staged some recovery during the day as in early trade, the Sensex had fallen over 1,000 points, and the Nifty had slipped below the 17,000 mark.

Except Information Technology (IT) all other sectoral indices ended in the red.

Both the Nifty small-cap and mid cap indices underperformed the benchmark Nifty 50, tumbling 3.4 per cent and 3.1 per cent, respectively.

"The speed with which central banks across the globe are hiking interest rates, investors are worried that slackening growth would push key economies into recession. With the monetary policy decisions on the anvil, rate-sensitive stocks like banking, realty and auto crumbled badly as rate hikes could dent demand going ahead. However, due to markets being in oversold territory, we could witness a quick pullback rally," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

On the Sensex, HCL was the top gainer of the day, gaining 1.28 per cent to settle at Rs 906.90 apiece on the BSE. Other top gainers included Asian Paints (1.14 per cent), Infosys (1.06 per cent), Ultratech Cement (0.50 per cent), TCS (0.40 per cent) and Nestle India (0.18 per cent)

Maruti Suzuki was the top loser of the day, shedding 5.49 per cent to end at Rs 8,830 apiece on the BSE. Other top losers included Tata Steel (4.40 per cent), ITC (3.96 per cent), Axis Bank (3.40 per cent), NTPC (3.35 per cent) and Bajaj Finance (3.34 per cent).

Investors are now keenly awaiting the outcome of the Reserve Bank of India's (RBI) Monetary Policy Commitee (MPC) meeting, due on 30 September. Economists are predicting a rate hike in the range of 35-50 bps.

The Indian Rupee also slipped to its lifetime low on Monday and ended at 81.66 against the US Dollar. The Dollar index also surged to around 114-mark. Foreign Institutional Investors are pulling money out of Indian market as a result of rupee depreciation. 

Foreign institutional investors sold net 29 billion rupees worth Indian equities on Friday as per provisional data available with the National Stock Exchange.

In another sign of growing distress over the fate of the world economy, the Organisation for Economic Co-operation and Development (OECD) on Monday projected the world economy to take a bigger hit than previously forecast in 2023 because of Russia’s war in Ukraine.

Covid outbreaks are still having an impact on the global economy while growth has also been affected by rising interest rates as central banks scramble to cool red-hot prices, the OECD said.

"A number of indicators have taken a turn for the worse, and the global growth outlook has darkened," the Organisation for Economic Co-operation and Development said in the report.

Global growth stalled in the second quarter of this year and data in many economies "now point to an extended period of subdued growth", the OECD said.