Key indices drift lower as US Fed turns hawkish
Sensex, Nifty tumble after Federal Reserve acted in total contrary to market expectation of softer approach amid easing inflation pressure; Re fall further weighs on mkts; IT stocks under pressure on renewed fears about global recession
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Mumbai: BSE Sensex plummeted 879 points, while NSE Nifty crashed below the 18,415 mark on Thursday, in tandem with a global sell-off after the US Federal Reserve increased the interest rate and signalled more hikes in its fight against inflation. A depreciating rupee added to the gloom, traders said. Reversing its two-day winning run, the 30-share BSE Sensex tanked 878.88 points or 1.40 per cent to finish at 61,799.03. The broader NSE Nifty plummeted 245.40 points or 1.32 per cent to end at 18,414.90.
"The Fed has startled the market by maintaining its hawkish tone, as investors were expecting a softer approach after the release of better-than-expected inflation numbers. IT stocks led to pessimism in the domestic market as recession fears grew in the global economies following the Fed's comments. The market now awaits the BoE (Bank of England) and ECB (European Central Bank) decisions, which are likely to follow a half-point hike," said Vinod Nair, head (research) at Geojit Financial Services.
"The US Fed effect led to a massive sell-off in the markets as banking, IT, metal and realty stocks received severe pounding at the hands of investors. Markets were disappointed after the Fed indicated that the rate hike regime would continue next year, which further accentuated the already fragile market sentiment prompting investors to trim their equity exposure," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.
Foreign institutional investors (FIIs) were net buyers on Wednesday as they bought shares worth Rs 372.16 crore, according to exchange data.
