The Indian equity markets continued to witness selling pressure on Tuesday but the losses narrowed compared with the previous session, owing to better than expected CPI data released on Monday.
The S&P BSE Sensex lost 153 points, or 0.29%, to 52,693.57. Stocks that lost the most included IndusInd Bank (2.37%), Tech Mahindra (2.08%), Reliance (1.33%), HDFC Bank (1.24%), HDFC (1.23%) and HUL (1.08%).
The NSE Nifty 50 index too lost 42.3 points, or 0.27%, to 15,732.1.
“The domestic market [was] restrained from heavy sell-off as CPI data moderated on month-on-month basis and this had a calm-down effect amidst global volatility,” said Vinod Nair, head of Research at Geojit Financial Services.
“However, elevated WPI data continued to dominate the broad market, which is cautious, awaiting Wednesday’s outcome of Fed policy. Earlier, the global market was anticipating a 50 bps hike but now is worried about a higher rate hike due to persistent U.S. inflation,” he added.
The Indian rupee also remained under pressure and closed slightly stronger than Monday’s close, which was its historic low.
Sugandha Sachdeva, vice president, Commodity and Currency Research, Religare Broking Ltd. said the Indian rupee had been on a downward since the beginning of the year and had depreciated about 5% so far in 2022.
“Along with rising crude oil prices, the prime culprit behind the rupee losing value against the dollar is the sharp rally in the greenback, which has risen by around 10% year-to-date towards a fresh two-decade peak,” she said.
“The US dollar is witnessing safe-haven flows as market participants are bracing for rapid-fire rate hikes by the U.S. Fed in its battle against inflation, which has raised the risks of a growth slowdown,” she added.
“This is leading to massive capital outflows from domestic equities. In its battle against scorching inflation, the U.S. Fed might even look at raising the interest rate by around 75 bps at its June meeting which shall be a key headwind for the rupee in the near term,” she added.
