Market Today: The frontline equity indices on the BSE and National Stock Exchange (NSE) trimmed some of their opening losses and were trading around 1.4 per cent lower in the late morning deals on Monday amid weakness in the global markets that fell after the head of the US Federal Reserve indicated high-interest rates will continue for some time to curb inflation.
At 10:30 am, the S&P BSE Sensex was down 823.82 points (1.40 per cent) at 58,010.05, while the Nifty 50 was trading at 17,315.60, down 243.30 points (1.39 per cent). Both the indices had opened over 2 per cent lower earlier in the day and slipped nearly 2.5 per cent in early deals with the Sensex hitting an intraday low of 57,367.47 and the broader Nifty touching 17,166.20.
On the Sensex pack, the losses were led by IT stocks – Tech Mahindra, Infosys, HCL Technologies, Wipro and Tata Consultancy Services (TCS). Apart from these, Tata Steel, Kotak Mahindra Bank, Axis Bank, State Bank of India (SBI) and Bajaj Finance were also among the laggards. In contrast, Hindustan Unilever (HUL), Maruti Suzuki India, Nestle India, Ultratech Cement and Reliance were trading marginally higher.
“Markets expected Powell to remain hawkish at Jackson Hole but the ultra-hawkish tone of the Fed chief’s message and his warnings that Fed’s policy will “cause some pain to households and businesses” and this is “the unfortunate costs of reducing inflation” were not expected and factored-in by the markets. The 17 per cent rally in S&P 500 from mid June to mid August was mainly driven by expectation that with declining inflation Fed would pivot towards lower interest rates by early 2023. This expectation has been belied by Powell’s message that rates will go up and remain there for ‘sometime’,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
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“The sharp rise in the Dollar index above 109 and the 10-year bond yield spiking to 3.1 per cent are negative for capital flows to EMs like India. FPIs are unlikely to continue buying in India in this scenario. The ‘buy on dips’ texture of the market is unlikely to hold. Investors should not rush in to buy the dips now. Better wait for the dust to settle,” he noted.
The rupee depreciated 31 paise to an all-time low of 80.15 against the US dollar in early trade on Monday tracking the strength of the American currency and firm crude oil prices.
At the interbank foreign exchange, the rupee opened at 80.10 against the dollar, then lost ground to quote at 80.15, registering a fall of 31 paise from the last close. On Friday, the rupee closed at 79.84 against the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.51 per cent higher at 109.35.
Asian shares declined Monday after the head of the US Federal Reserve indicated high interest rates will continue for some time to curb inflation.
The plunge in early trading in Asia paralleled the drop on Wall Street, where the Dow Jones Industrial Average ended the week sinking more than 1,000 points. A slowdown in the US is damaging to Asia’s export-reliant economies.
The message from Federal Reserve Chair Jerome Powell in a speech Friday had been expected, though some had wished for words that weren’t quite so clear.
Japan’s benchmark Nikkei 225 dipped 2.8 per cent in morning trading to 27,831.06. Australia’s S&P/ASX 200 dropped 2.2 per cent to 6,946.30. South Korea’s Kospi slipped 2.2 per cent to 2,425.70. Hong Kong’s Hang Seng slid 1.1 per cent to 19,949.62, while the Shanghai Composite edged down 0.5 per cent to 3,220.04.
The S&P 500 fell 141.46 points, or 3.4 per cent, to 4,057.66. The benchmark index is now down almost 15 per cent for the year. The Dow lost 1,008.38 points, or 3 per cent, to close at 32,283.40. The last time the blue-chip average had a 1,000-point drop was in May. The Nasdaq slid 497.56 points, or 3.9 per cent, to 12,141.71, its biggest drop since June.
(with rupee and global market inputs from PTI and AP)