MUMBAI: The Sensex closed at a nearly three-month low of 27,643 on Thursday, down 439 points, or 1.6%, after global factors, including weak Chinese export data and talks of a rate hike by the US Fed, unnerved investors.
China’s steel exports declined unexpectedly (it shipped 8.8 million metric tonnes of steel in September compared with 9 million tonnes in August and a record 11.2 million tonnes a year ago) and the minutes of US Federal Reserve Open Market Committee indicated a strengthening case for a rate hike. A rate hike in the US could trigger outflows by foreign funds from emerging markets, including India.
Investors were also cautious ahead of September retail inflation data and key quarterly results to be released after markets hours.
The Nifty ended down 135 points, or 1.5%, to close at 8,573 points. The markets opened on Thursday after two days of trading holidays.
The fall was across the board with financials seeing a major sell-off; HDFC was down 3.8% followed by ICICI Bank (down 3.5%), SBI (down 2.46%) and Axis Bank (down 2.38%). Other losers included Adani Ports (down 4.6%), RIL (down 3.5%) and Tata Motors (down 3.1%).
Sectoral indices, including BSE bankex, realty, finance and telecom were down around 2.2% each.
{{/usCountry}}Sectoral indices, including BSE bankex, realty, finance and telecom were down around 2.2% each.
{{/usCountry}}In line with equities, the rupee also fell 41 paise, its biggest decline in two weeks, to 66.94 against the dollar.
“Investors were cautious ahead of TCS and Infosys Q2 results. Apart from this, sentiment was also a bit cautious after Fed minutes on Wednesday showed that three members of the Federal Open Market Committee dissented and called for a rate hike,” said Sanjeev Zarbade, vice-president at Kotak Securities. “Commodities sold off following the weak trade data from China.”
Early in the day, Deutsche Bank said the nervousness was expected. “The Fed minutes show what everyone has known for eight weeks: officials want to get on with normalisation ‘soon’. If not November, a hike looks assured by December. The labour market is strong, the housing market is strong, consumption is strong. Inflation and wage growth have accelerated significantly over the past year. At 2.3%, core CPI inflation now stands three ticks above the Fed’s 2% target,” according to a research report by the bank.