Rate-sensitive stocks discount US rate hike
Sluggish expiry session: Banking, auto stocks lead the fall on bourses as investors offloaded their positions in RIL, HDFC Bank, M&M; realty and pharma stocks in focus
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Mumbai Equity benchmark indices Sensex and Nifty buckled under heavy selling pressure on Thursday as investors pared exposure to bellwether stocks HDFC Bank, M&M, Nestle and Reliance Industries (RIL) amid a mixed trend in global markets. Besides, the interest rate hike by the US Fed failed to boost sentiments in the domestic market, which saw a steep decline led by banking and auto stocks, traders said.
After opening with gains of over 125 points, BSE Sensex plunged 440.38 points or 0.66 per cent to settle at 66,266.82, while Nifty declined 118.40 points or 0.60 per cent to close at 19,659.90.
“Markets witnessed wild gyration on the expiry day as the US Fed signalling one more rate hike dampened the sentiment and prompted investors to book profit in automobile, banking and oil & gas shares. However, realty and pharma shares were in the limelight after the recent correction. Many investors are not comfortable with the current valuations, and hence are redeeming their investment on every possible opportunity,” said Shrikant Chouhan, head (research-retail), Kotak Securities Ltd.
According to Vinod Nair, head (research) at Geojit Financial Services, “the US Federal Reserve’s interest rate move, which triggered positive cues globally, failed to boost the sentiment in the domestic market, which saw a sharp correction led by banking and auto stocks. The FOMC’s decision aligned with market expectations as they implemented a 25 bps hike and expressed a data-centric approach for future rate actions. Positive global sentiment prevailed due to the reduced prospects of a US recession. Despite this, the domestic market witnessed sharp corrections led by banks and autos, while pharma stocks performed on a positive start to their earnings season.”
“Profit booking was the order of the day as investors preferred to book profit after the US Fed delivered a 25 bps rate hike yesterday. The benchmarks ended the expiry day on an uninspiring note,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
“Fed’s statement today left the door open for an additional hike, but the final decision will depend on how the economic data evolve between now and then. It noted that its rate-setting committee remains highly attentive to inflation risks,” said Devarsh Vakil - Deputy Head of Retail Research, HDFC Securities.
