The stock markets, on Monday, witnessed a massive selling pressure in line with a meltdown in global stock markets following flow of encouraging job data from the U.S.
The benchmark stock indices plunged sharply as foreign instructional investors (FIIs) pressed for sale. They were in a mood to reduce their exposure in emerging markets such as India and divert money to the U.S. bond market following a possible increase in interest rate by the U.S. Federal Reserve shortly, said analysts.
As a result, the BSE Sensex crashed 604 points or 2.05 per cent to close below the psychological mark of 29000 at 28845 points. The broader NSE Nifty index closed with a loss of 181 points or 2.03 per cent at 8756.75.
Selling was witnessed across the board. Metal and IT stocks bore the maximum brunt. However, the course of the market will depend on the passage of several important bills pending for approval in Parliament.
Rupee down 39 paise
Following the sell-off in the equity market, the rupee came under pressure and closed at Rs.62.55 to a dollar against its previous close of Rs.62.16 per dollar, down 39 paise. “The rupee is under pressure for last two trading sessions and it is because the FIIs are booking profit and sucking out liquidity. The rupee will trade in the range of 62.80 and 61.80 this month,” said Pramit Brahmbhatt, CEO, Veracity Financial Services.
Bond market
The possibility of a rate hike by the US Fed over the next few months weighed on the India Government Securities market.
The benchmark 8.40 per cent G-Sec maturing in 2024 slipped to Rs.104.33 from Rs.104.56. Yield on this security rose to 7.74 per cent from 7.71 previously. Bond yields and prices move in opposite directions.
PTI reports:
The markets logged their biggest drop in over two months on fears an earlier-than-expected rate hike by the U.S. will hit inflows. It was a sea of red in the domestic markets. Nearly 1,900 shares on the BSE fell while less than 1,000 managed to rise.
Banking, power, capital goods, realty, metal, IT, oil as well as gas, auto and FMCG shares reported sharp losses. Only pharma stocks managed to buck the extremely negative trend on bourses. Further more, weakness in the rupee weighed on the sentiments.
Global stocks dip, but Wall Street gains
Stocks in major markets fell on Monday as investors bet the Federal Reserve will raise interest rates sooner than previously expected, while U.S. and eurozone bond prices rose as the European Central Bank started its bond-buying program.
European shares were down, tracking moves in Asia.
Deal news and share buybacks helped Wall Street open higher after two weeks of losses, with the S&P 500 about 2 per cent below its record high set last week.
The Dow Jones industrial average rose 105.55 points, or 0.59 per cent, to 17,962.33; and the Nasdaq Composite added 1.42 points, or 0.03 per cent, to 4,928.79.
A larger pullback is still likely on Wall Street, according to a Monday note from Brian Reynolds, chief market strategist at Rosenblatt Securities in New York.
The pan-European FTSEurofirst 300 index was last down 0.4 per cent and Tokyo’s Nikkei closed 0.95 per cent lower.
