With the BSE Sensex falling over 1,500 points today amid a global selloff, equity investors lost nearly 6 lakh crore. Indian shares fell sharply and the rupee hit a record low as US inflation data and a COVID-19 warning from Beijing roiled global markets, with traders in Asia’s third-largest economy looking for further cues in May consumer price data. In the most recent trade, the NSE Nifty 50 index was down 2.5 percent at 15,785.
The Fed’s policy decision is scheduled for later this week. Analysts anticipate aggressive rate hikes by the US Federal Reserve, as May data showed inflation reaching a 40-year high.
“The near-term market trend is weak. The May US inflation print at 8.6% against the market expectation of 8.3% is likely to turn the Fed more hawkish with a series of 50 bps rate hikes taking the terminal rate by mid-2023 above 3.5%. Such a scenario would be negative for risky assets like equity, particularly in the context of declining global growth,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Sensex dips 1500 points
“The Indian market will stabilize only when the US market stabilizes. Therefore, investors may wait and watch till clarity emerges on the market trend. One silver lining is the 7.1% increase in IIP which indicates that the Indian economy is doing well. Therefore, long-term investors can use the dips in the market to buy high quality economy-facing stocks like capital goods, banking, telecom and export segments,” he added.
The rupee today fell to a lifetime low of 78.28 per dollar. While the benchmark 10-year bond yield rose to 7.60 percent, its highest level since February 2019.
All eyes are now on India’s retail inflation data. Which is due later today. According to a Reuters poll, the consumer price index fell slightly in May. But remained well above the Reserve Bank of India’s upper tolerance limit for the fifth consecutive month.
“Nifty opened gap down as equity markets across globe are witnessing a sell-off after US May inflation data accelerated to four decades high which raised concerns about aggressive rate hikes by US Fed in the upcoming monetary policy meet due this Wednesday. US treasury yields surged to 14-year high at 3.15% while dollar index spiked above 104 levels. US futures are also down 1%. On the domestic side, India’s inflation data is due today on account of which nervousness is likely to be seen in the market. Apart from these market would continue to remain cautious ahead of various central banks meetings in this week”. Hemang Jani, Head Equity Strategy, Motilal Oswal Financial Services, said.
As of now the Sensex stands at 52,824.33 points.