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Indian equities fell for the third straight session on Thursday amid a hawkish tone by the US Federal Reserve and rising global crude oil prices.
The Federal Reserve held interest rates steady on Wednesday, in line with market expectations. The dot plot, however, indicated another rate hike this calendar year before a longer than expected pause and slower pace in cutting rates.
The Sensex slid 0.85 per cent to 66,230, while the Nifty was down 0.8 per cent to 19,742 on Thursday. The broader market indices Nifty Midcap 100 and Nifty Smallcap 100 slid 0.89 per cent and 1.34 per cent, respectively. The Sensex has shed 1,497 points, or 2.3 per cent, in the last three sessions.
- Also Read: US Fed decision and Jerome Powell’s hawkish talk: How it impacted asset classes across the world
Top losers
M&M (3.1 per cent), ICICI Bank (2.8 per cent), and Cipla (2.7 per cent) were the top losers on Thursday. Banking, auto, financial services, and realty were the key sectoral losers. About 64 per cent, or 2,436 of BSE components, declined.
Foreign institutional investors (FPIs) sold shares worth ₹3,007 crore on Thursday, provisional data showed. The investors have offloaded shares worth ₹8,289 crore this month till Wednesday.
Weak global cues
“Bearish sentiment across global equities led to selling in the domestic market for the third straight session as investors fretted over the US Fed statement indicating one more rate hike later this year. Negative catalysts like lingering overseas fund outflows, rising US dollar index and treasury yields, and higher crude oil prices are making investors jittery,” said Shrikant Chouhan, Head of Research (Retail), Kotak Securities.
Vinod Nair, Head of Research at Geojit Financial Services, said: “The domestic market declined following a hawkish stance by the Fed chair and a prolonged high interest rate trajectory, which is not positive for a slowing global economy. PSU banks and mid- and small-caps were the worst hit due to stretched valuations and concern over moderation in yields. Rising oil prices and erratic rainfall further led investors to stay cautious in the market.”
- Also Read: Crude oil down on hawkish stance by US Fed
Most Asian indices ended deep in the red on Thursday, with South Korea’s Kospi and Japan’s Nikkei 225 slipping 1.7 per cent and 1.4 per cent, respectively. European indices were trading in the red, with the CAC and DAX down more than a per cent. Investors would take cues from the Bank of England’s interest rate decision that is due late Thursday.
The formation of a top reversal pattern at 20,222 levels and the recent gap-down openings indicate more weakness ahead for the market. Key support for the Nifty could be around 19550 levels, which is the weekly 10-period exponential moving average, said analysts.
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