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Markets in free fall: Why Sensex, Nifty tumbled today
Among the 30-share Sensex pack, Maruti, Tata Steel, ITC, Bajaj Finance, Axis Bank, NTPC, Mahindra & Mahindra and IndusInd Bank were the major laggards. HCL Technologies, Infosys, Asian Paints, TCS, UltraTech Cement, Wipro and Nestle were the gainers.
Benchmark indices slipped for the fifth consecutive day as they lost around 1.7 per cent in value on Monday. The rupee went below 81.50 against the dollar during the day's trading. Sensex shed 950 points to close at 57,145, while Nifty ended at 17,016, a drop of 311 points.
Among the 30-share Sensex pack, Maruti, Tata Steel, ITC, Bajaj Finance, Axis Bank, NTPC, Mahindra & Mahindra and IndusInd Bank were the major laggards. HCL Technologies, Infosys, Asian Paints, TCS, UltraTech Cement, Wipro and Nestle were the gainers.
Elsewhere in Asia, markets in Seoul, Tokyo, Shanghai and Hong Kong ended sharply lower. European bourses were trading in the red in mid-session deals. The US markets ended in the negative territory on Friday.
Global market
Last week, the US Federal Reserve made aggressive rate hike of 75 basis points. Since then, global markets have been trading volatile. According to Zee Business, the weakness persisted in the US market on Friday as all major indices slipped in the red during closing.
RBI monetary policy
According to experts, the focus will now shift to RBI's meeting this week, with its decision due on Friday. The 38th meeting of the Monetary Policy Committee, constituted under the Reserve Bank of India Act, will be held during September 28 - 30. The RBI is set to raise rates again this week, with a slim majority of economists in a Reuters poll expecting a half-a-percentage-point hike and some others expecting a smaller 35-basis-point rise.
Dollar index
The rupee plunged 58 paise to close at an all-time low of 81.67 (provisional) against the US dollar on Monday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit. Moreover, escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite, forex traders said.
At the interbank foreign exchange market, the local currency opened at 81.47, then fell further to close at an all-time low of 81.67 against the American currency, registering a decline of 58 paise over its previous close.
"Another day of large gains for the dollar versus the rupee as it fell for the fourth day in a trot amid risk-averse sentiments and unprecedented strength in the greenback following Fed tightening and recession worries," said Dilip Parmar, Research Analyst, HDFC Securities.
Spot USD-INR may head towards 82 as strength in the dollar index continues with surging bond yields, Parmar said, adding that in the near-term, spot USD-INR is having resistance at around 82 and support at 81.05.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.46 per cent to 113.71.
Recession fears
US stock index futures fell on Monday, kicking off another week on softer footing, as investors worried that the Federal Reserve's aggressive push to curb inflation may tip the American economy into recession. At 6:21am ET, Dow e-minis were down 225 points, or 0.76 per cent, S&P 500 e-minis were down 27.75 points, or 0.75 per cent, and Nasdaq 100 e-minis were down 54 points, or 0.47 per cent.
The Fed's latest signal that high-interest rates could last through 2023, sent the three major U.S. stock indexes tumbling between 4 per cent and 5 per cent last week, with the Dow Jones Index coming within spitting distance of a bear market on Friday.
(With inputs from Reuters, PTI)
