Sensex dips 604 points on US rate hike fears
Indian stocks fell the most in over two months on Monday with benchmark Sensex tanking 604 points to 28,844.78 and Nifty index tumbling 181 points to 8,756.75 on massive selling in line with global markets on fears of an earlier-than-expected US interest rate hike.
After US Labour Department said unemployment fell to 5.5 per cent in February, the lowest level since May 2008, speculation was triggered that the US Federal Reserve will lift rates from near-zero as early as summer, say brokers. If the US Fed hikes rates earlier than markets estimated, emerging countries like India may be hit. Rupee’s plunge too kept the market on a shaky ground.
After a gap-down opening, key indices kept falling as key supported levels triggered fresh short-selling, say brokers. Rich valuations after recent record breaking rally and lack of definite cues with two major events - the Union Budget and the much awaited rate cut by the RBI out of the way, domestic investors preferred booking profits, they added. The Sensex opened at 29,316.54 and fluctuated between a high of 29,321.06 and a low of 28,799.76 before concluding at 28,844.78, a massive fall of 604.17 points, or 2.05 per cent over last close. Previously, it had plunged by 854.86 points or 3.07 per cent on January 6, 2015. It was a sea of red in domestic markets today. Nearly 1900 shares on the BSE fell while less than 1,000 managed to rise.
“There are concerns over liquidity flows into India and other emerging markets, when US actually increases interest rates,” said Dipen Shah, Head of PCG (Private Client Group) Research, Kotak Securities. Banking, power, capital goods, realty, metal, IT, oil&gas, auto and FMCG shares reported sharp losses.
The NSE index, CNX Nifty also plummeted by a massive 181 points, or 2.03 per cent to end at 8,756.75 after touching a intra-day low of 8,740.45. This was also its worst daily drop since January 6 when it slid by 251 points. Elsewhere in the region, barring Shanghai Composite which rallied on the back of strong export data, most equities remained under intense selling pressure with key indices in Hong Kong, Japan, Singapore and Taiwan ending lower.