Market today: Frontline equity indices on the BSE and the National Stock Exchange (NSE) pared some of their early losses and were trading lower by around 1.4 per cent in Monday morning deals amid weakness in global markets. US Federal Reserve indicated Higher interest rates will continue for some time to check 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 243.30 points (1.39 per cent) down at 17,315.60. Both the indices had opened more than 2 per cent lower in the first day with the Sensex trading as low as 57,367.47 and the Nifty touching 17,166.20 with a fall of nearly 2.5 per cent in opening deals.
On the Sensex pack, 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 also lagged behind. In contrast, Hindustan Unilever (HUL), Maruti Suzuki India, Nestle India, UltraTech Cement and Reliance were trading with marginal gains.
“Markets expected Powell to remain bullish on Jackson Hole, but the Fed chief’s message and the ultra-hawkish tone of his warnings that the Fed’s policy will “cause some pain for homes and businesses” and that it will “reduce inflation.” The S&P 500’s rally of 17 percent from mid-June to mid-August was primarily driven by expectations that the Fed will be lower in early 2023 with a fall in inflation. This expectation has been reinforced by Powell’s message that rates will rise and remain so for ‘sometime’, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
“A sharp rise above 109 in the dollar index and a 3.1 per cent rise in the 10-year bond yield is negative for capital inflows to EMs like India. In this scenario, FPIs are unlikely to continue buying in India. The ‘dip on dips’ texture of the market is unlikely to persist. Investors should not rush to buy dips right now. It is better to wait for the dust to settle down,” he said.
Rupee down 31 paise an Lowest ever level 80.15 Against the US dollar in early trade on Monday, keeping in view the strength of the US currency and firming in crude oil prices.
At the interbank forex, the rupee opened at 80.10 against the dollar, then lost ground to bid at 80.15, registering a fall of 31 paise from the previous close. The rupee had closed at 79.84 against the dollar on Friday.
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 stocks fell on Monday after the head of the US Federal Reserve indicated that higher interest rates continued for a while to curb inflation.
The decline in early trading in Asia is similar to a fall on Wall Street, where the Dow Jones Industrial Average ended the week lower by more than 1,000 points. The slowdown in the US is damaging to the export-dependent economies of Asia.
Federal Reserve Chairman Jerome Powell’s message was expected in a speech on Friday, though some wished for words that weren’t so clear.
Japan’s benchmark Nikkei 225 fell 2.8 per cent to 27,831.06 in morning trade. Australia’s S&P/ASX 200 fell 2.2 per cent to 6,946.30. South Korea’s Kospi fell 2.2 per cent to end at 2,425.70. Hong Kong’s Hang Seng was down 1.1 per cent at 19,949.62, while the Shanghai Composite was down 0.5 per cent at 3,220.04.
The S&P 500 fell 141.46 points, or 3.4 percent, to end at 4,057.66. The benchmark index is now down about 15 per cent for the year. The Dow closed down 1,008.38 points, or 3 per cent, at 32,283.40. The last time the blue-chip average fell by 1,000 points was in May. The Nasdaq closed 497.56 points, or 3.9 percent, down at 12,141.71, its biggest drop since June.
(With rupee and global market inputs from PTI and AP)