Fed’s hawkish tone spooks equity, forex markets, Sensex slips 879 points, rupee slides 27 paise

Fed startled market by maintaining hawkish tone; investors were expecting a softer approach after the release of better-than-expected inflation numbers, says an analyst

Updated - December 15, 2022 10:04 pm IST

Published - December 15, 2022 08:07 pm IST - Mumbai

Benchmark equity indices fell by about 1.3% and the rupee weakened by 27 paise against the U.S. dollar on Thursday following a ‘hawkish tone’ adopted by the U.S. Federal Reserve the previous day when it raised interest rates, analysts said.

The S&P BSE Sensex slumped 879 points. or 1.4%. to 61,799.03 points. The Sensex stocks which lost the most include TechMahindra (3.98%), Infosys (2.59%), Titan (2.57%), HDFC (2.07%) and ITC (1.87%). The NSE Nifty 50 index too fell 245.40 points, or 1.32%, to 18,414.90 points.

“The Fed has startled the market by maintaining its hawkish tone, as investors were expecting a softer approach after the release of better-than-expected inflation numbers,” said Vinod Nair, head of Research at Geojit Financial.

“IT stocks led to pessimism in the domestic market as recession fears grew in the global economies following the Fed’s comments. The market now awaits the BOE and ECB decisions, which are likely to follow a half-point hike,” he said.

The rupee also came under pressure, sliding 27 paise to 82.76 against the dollar.

Anindya Banerjee, vice-president, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd., said, “Rupee continues to remain one of the weakest currencies as demand for dollars remain strong in the onshore market and lack of exporter selling and carry trades, keep supply low”.

“A hawkish Fed also helped the U.S. dollar. Over the near term we expect a range of 82.25 and 83.00 on spot,” he said.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.