The Indian equity benchmarks fell for second straight session on Wednesday mirroring losses in world markets as worries of aggressive monetary tightening amid surging inflation rattled investors' sentiment globally. The Sensex fell as much as 666 points and Nifty 50 index broke below its important psychological level of 17,800. HDFC Bank, HDFC, Infosys, Tata Consultancy Services, Kotak Mahindra Bank and Axis Bank were among the top drags on the Sensex.
The Sensex declined 566 points or 0.94 per cent to close at 59,610 and Nifty 50 index dropped 150 points to settle at 17,808.
Global stock markets and Wall Street futures sank Wednesday after a Federal Reserve official’s comments fueled expectations of more aggressive U.S. rate hikes and the White House announced more sanctions on Russia.
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London and Frankfurt opened lower. Tokyo and Hong Kong fell, while Shanghai was little changed. Oil prices rose more than $1 per barrel.
Wall Street’s S&P 500 index tumbled 1.3 per cent on Tuesday after Fed Governor Lael Brainard said reining in inflation that is at a four-decade high is of “paramount importance.” Brainard said the Fed is set to keep raising rates after its March hike, its first in four years, and might decide at its May meeting to reduce bond holdings “at a rapid pace.”
Back home, the Reserve Bank of India's rate setting - Monetary Policy Committee began its first bi-monthly monetary policy meet of current fiscal today, the outcome is expected on February 8. RBI is widely expected to keep the rates on hold despite rising inflation globally, analysts said.
"Considering domestic growth is still in the early stages, the Committee is likely to keep key policy rates unchanged in the upcoming monetary policy meeting. Even though the RBI is reiterating its commitment to supporting growth and easy liquidity, some revisions to inflation and growth forecasts can be expected. The overall growth rate has faced setbacks due to high commodity and input prices and chip shortages. Rising inflation, although transitory and imported, will weigh on the growth in the coming months. The rising input prices and increasing crude and global commodity prices do not hint toward a smooth path and will likely delay spending and hit business and consumer sentiment," said YS Chakravarti, MD & CEO, Shriram City Union Finance.
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Selling pressure was broad-based as twelve of 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Financial Services index's 1.6 per cent decline. Nifty Bank, IT, Media, Private Bank and Healthcare indices also fell between 0.5-1.6 per cent.
On the other hand, metal, PSU bank and oil & gas shares faced selling pressure.
Broader markets outperformed their larger peers as Nifty Midcap 100 index rose 0.6 per cent and Nifty Smallcap 100 index advanced 0.12 per cent.
Among the individual shares, Ruchi Soya Industries took a severe beating on the bourses on Wednesday, the stock fell 19 per cent a day after the company announced the allotment of shares under the Rs 4,300 crore-Follow on Public Offer (FPO) which had also come under regulatory lens for certain issues.
HDFC Bank and HDFC witnessed profit booking for second straight session after staging a massive upmove on Monday after the merger plan was announced. Both the stocks fell over 3 per cent each.
HDFC Life, HCL Technologies, Tech Mahindra, Infosys, TCS, Shree Cements, Divi's Labs, Kotak Mahindra Bank and Axis Bank also fell 1.2-2.4 per cent.
On the flipside, Coal India, NTPC, Tata Steel, Power Grid, Bharat Petroleum, Nestle India, Bharti Airtel, Cipla and Larsen & Toubro were among the gainers.
The overall market breadth was positive as 2,163 shares ended higher while 1,250 closed lower on the BSE.
(With inputs from AP)
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