Sensex sheds 439 pts over rate hike signal from US Fed

RSTV Bureau

BSE Sensex suffered the biggest single day fall since January 20, 2016.

On Thursday Indian markets tanked deep into the red zone amid a global sell-off spree sparked the speculation of another US Fed rate hike this year. Sensex shed 439.23 points to end at 27,643.11. Nifty too slumped 135.45 points to finally close at 8,573.35.

At mid-session Sensex plunged over 475 points or 1.69 per cent, as the selling pressure gathered momentum, mirroring falls across Asia and a lower opening on European bourses following worse-than-expected economic data from China.

Trading sentiment was further dampened with minutes of the US Federal Reserve’s September meeting signalling a possible rate hike this year. Markets mood slumped on fears that an expected US rate hike could trigger outflows by foreign funds from emerging markets, the brokers explained.

The minutes of the September 20-21 meeting, at which the US central bank held rates steady, showed a greater probability of a rate hike in December. Several voting Federal Reserve policymakers judged a rate hike would be warranted “relatively soon” if the US economy continued to strengthen.

“Market was in an intense selling mode after two trading holidays tracking weak global markets which were impacted by poor Chinese trade data, fear of hike in US interest rate and Brexit worries. Domestically investors are also cautious due to the unimpressive August IIP data and awaiting key Q2 results,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services Ltd.

Adding to the global woes, China’s September exports fell 10 per cent from a year earlier, far worse than expected, while imports unexpectedly shrank 1.9 per cent after picking up in August, suggesting signs of stability in the world’s second-largest economy may be short-lived.

Sensex, which had lost over 265 points in early trade, continued its slide as all sectoral indices led by realty, metal and consumer durables slumped by up to 3.28 per cent.
Nifty too plunged to break below the 8600-mark to dip to 8,563.70.

Most of the 30-Sensex constituents led by Adani Ports, Tata Motors, ICICI Bank, HDFC Ltd, SBI, Reliance Industries, Axis Bank, Lupin, Hindustan Unilever, Bharti Airtel,Coal India, Sun Pharma and Power Grid were trading in the negative terrain, falling by up to 5.23 per cent.

Other Asian markets like Japan’s Nikkei fell 0.39 per cent and Hong Kong’s Hang Seng lost 1.67 per cent.

European markets led by London, Paris and Frankfurt too were in the red, down by up to 1.31 per cent in their early trade.

(With inputs from PTI)