Sensex falls 1,045 points following rate increase by Fed

Equity market indices in India lost 2% on Thursday following the U.S. Federal Reserve increasing key rates by 75 basis points to deal with high inflation.

The S&P BSE Sensex lost 1,045.6, or 1.99%, to a 52-week low of 51,495.79.

Stocks that declined the most include Tata Steel (6.04%), Tech Mahindra (4.37%), Bharti Airtel (4.11%), Wipro (4.04%) and IndusInd Bank (3.96%).

The NSE Nifty-50 index too plunged 331.55 points or 2.11% to 15,360.60.

”Initially, the benchmark opened with an uptick, in reaction to the rate hike by the U.S. Fed, which came in line with the expectation,” said Ajit Mishra, vice-president, Research, Religare Broking. “However, it couldn’t sustain for long and gradually drifted lower as the day progressed,” he added.

“Markets are skeptical about how global economies would attain growth amid the aggressive tightening,” he pointed out.

Vinod Nair, head of Research, Geojit Financial Services, said: “Market is catching up to the reality that tight monetary policy is the lone card on the table [against] lingering high inflation. As a result, the global economy is bound to slow down further impacting corporate earnings, as indicated by the [month-on-month] fall in U.S. retail sales.”

“Valuations continue to trade on the marginally upper side of long-term averages and FIIs continue to [remain in] selling mode. Stocks trading at high valuations and sectors like IT and metals are the most impacted,” he added.

The rupee recovered from its record low to close 12 paise higher at 78.10 against the American currency on Thursday, tracking the overnight weakness of the dollar and falling crude oil prices.

(With PTI inputs)