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Indian equities slid over a per cent as profit booking, the possibility of a delay in rate cut by the US Fed and Japan’s rate hike weighed on sentiment.
Bank of Japan raised its benchmark interest rate for the first time in 17 years, ending a long negative rate policy. The concerns over premium valuations and the delay in rate cuts by the US Fed due to hotter than expected inflation, evident from the upward trend in the dollar index, weighed on sentiment.
The Sensex shed 736 points or 1.01 per cent to settle at 72,012. The Nifty ended at 21,817, down 1.08 per cent, its lowest level in over a month. Selling pressure was seen across mid and small-caps. 77 per cent of BSE components declined. Top Nifty losers include TCS and BPCL, which shed over 4 per cent each. Sectoral indices IT, FMCG, and Pharma shed over 2 per cent each and were the were the top laggards.
FPIs bought shares worth ₹1,491 crore, while domestic institutions bought shares worth ₹7,449 crore on Tuesday.
‘Exercising caution’
Vinod Nair, Head of Research, Geojit Financial Services, said, “Investors are exercising caution as they await the upcoming US Fed meeting, seeking indications on the potential timing of a reversal in the rate cycle. The gradual increase in crude oil prices is further dampening market sentiment.”
Shares were mixed in Asia on Tuesday as investors weighed BoJ’s decision to hike rates. The bank raised its overnight call rate to a range of 0 to 0.1 per cent, up from minus 0.1 per cent. Hang Seng and Kospi lost over a per cent each. European stocks were trading marginally in the green, ahead of a week which will witness central banks taking major decisions globally.
“We expect the market to remain in consolidation mode as cautiousness persists with the commencement US Fed meeting today. While the US Fed is likely to maintain its stance and keep the rate unchanged, its commentary will hold importance as it would provide insights into the central bank’s future rate action,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
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