Fed's Hawkishness Keeps Equity Benchmarks In Red
The fall for domestic equity benchmarks continued for the third consecutive session on Thursday as minutes from the latest Federal Reserve meeting showed aggressive hawkishness to tame inflation. Investors are also closely awaiting RBI's Monetary Policy Committee's outcome.
The 30-share Sensex fell 575.46 points or 0.97 per cent to settle at 59,034.95 while its broader peer NSE Nifty fell 168.10 points or 0.94 per cent to settle at 17,639.55. The Sensex was dragged by losses in metals, consumer durables and IT counters. Reliance Industries, HDFC twins, TCS pulled the headline indices lower.
"Negative sentiment continued for the third straight session as the US Fed's hawkish stance has raised concerns of steeper interest rate hikes going ahead while investors also trimmed their positions ahead of RBI policy, although most of the experts believe the MPC may maintain status quo on policy rates. The fall was largely due to profit taking in Reliance Industries and other energy stocks amid volatility in global crude oil prices," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
The Nifty energy index fell 1.7 per cent and the IT index dropped 1.3 per cent to be among the top losers in sectoral indices.
"Nifty joined the conga-line of sinking stock markets across globe after minutes from the last March FOMC meeting showed many Fed officials are looking to reduce balance sheet by $95 billion per month. Fed officials also preferred a 50bps increase in the feds funds rate, instead of a 25bps hike. Radiating anxiety and nervousness were also the theme of recession risks that are seen ringing louder as the U.S Treasury yields have inverted again. This happens when short-term bond yields exceed those of longer-term bonds. It means investors are worried about the economy’s long-term prospects," said Prashanth Tapse, Vice President (Research), Mehta Equities.
Investors are now keenly awaiting the outcome of the MPC on Friday. Despite the price pressures, the central bank is expected to delay its first interest rate hike by at least four months to August at the earliest, according to a Reuters poll of economists.
"Technically, on intraday charts the Nifty is still holding lower high series formation and has also formed a bearish candle which is largely negative. However, in the last three days the index has corrected over 475 points and after a short term correction, it is currently trading near the important retracement support level. The market has completed one leg of correction and there is a strong possibility of a quick intraday relief rally if the index trades above 17720. Above the same, the index could move up to 17800 -17850," said Chouhan.
HDFC Bank and Housing Development Finance Corp were among the top losers in the blue-chip Nifty, falling 2.9 per cent and 2.2 per cent, respectively. Both the stocks have in the past three sessions erased all the gains made on Monday after an announcement on their merger
(With inputs from Reuters)
