Stock Market India: Nifty closes above 18,000; Sensex falls but remains over 60,000
Equity benchmarks ended lower on Wednesday, stalling a four-day bull run, driven by a global stocks selloff tracking an overnight slump in Wall Street, but the Sensex remained above the 60,000 level, and the Nifty closed above the 18,000 mark.
Both benchmarks registered their biggest intraday fall in over two weeks, tracking a sea of red in Asian bourses after an ugly selloff on Wall Street after data showed no respite from red-hot US inflation could drive more aggressive policy path bets.
Still, both the indexes recovered some losses after a deep crash earlier in the session, with the 30-share Sensex index closing 100 points lower but above the 60,000 points level and the NSE Nifty index ending at over 18,000 points.
“Markets regained most of its lost ground after the morning sell-off, with Nifty ending above the psychological 18,000 mark. Spooking investors across the globe is the uncertainty over the Federal Reserve’s rate-hike timeline, after the latest US inflation update showed consumer prices remained elevated in August,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
“So, the biggest catalysts and next direction for Nifty depends on the FOMC monetary policy meeting on September 20-21,” he added.
Nifty IT index fell 3.4 per cent, and heavyweight IT services giants Infosys and Tata Consultancy Services both had declines of roughly 4.5 per cent and 3.4 per cent, respectively.
Most other sub-indices experienced a session-long recovery, led by the banking and metals sectors, as analysts noted that India was better positioned than other nations to withstand the inflationary storm because to its faster growth rate.
Consistent purchases made by overseas investors have also helped to support the domestic market.
The largest lender State Bank of India saw its stock rise 2.5 per cent, and IndusInd Bank had its stock rise 4.5 per cent, helping the Nifty Bank index rise 1.3 per cent to a record closing high.
Nifty Metal index increased by 1.6 per cent.
Following Vedanta’s announcement that it will consider setting up a hub to produce Apple’s iPhones and TV equipment as well as potentially entering the electric vehicle market, the conglomerate’s shares increased by 10.1 per cent.
Among the top Sensex gainers were Power Grid Corporation, NTPC, Kotak Bank, Tata Steel, Bajaj Finance, Bajaj Finserv, HDFC Bank, and ICICI Bank.
Reliance Industries Limited, a significant component of the index, closed 1.23 percent lower at Rs 2,587.80 per share.
“The global stock market carnage had a rub-off effect on Indian equities, but benchmark indices pared most of their losses to end above their psychological levels thanks to buying in banking & metal stocks,” said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
“However, inflation has remained a key concern across the globe and higher-than-expected rate hikes by the US central bank could fuel pessimism amongst investors going ahead,” he added.
The safe-haven dollar registered its biggest gain since early 2020 as Wall Street experienced its steepest decline in two years, and US two-year Treasury yields, which climb in response to speculators’ anticipation of increasing Fed Fund rates, reached their highest level in fifteen years.The biggest four-day surge in the S&P 500 since June was completely erased by the stock market crash on Tuesday.
Investors are once again contemplating the possibility of tighter conditions across markets after returning to risky assets in recent days on expectations that inflation would continue to decline.
The US data released on Tuesday that revealed expanding underlying inflation had an international impact, with expectations now firming for an even more aggressive Federal Reserve tightening path.
The Nikkei of Japan sank 2.6 per cent, and the MSCI index of Asia-Pacific shares outside of Japan fell 2.2 per cent. A day after Wall Street experienced its largest decline in two years, US stock futures were mixed.
“The Fed has got further to go and there is an understanding that the peak rate will now be above 4%,” Seema Shah, Chief Strategist at Principal Global Investors, told Reuters.
“There had been a feeling that inflation was moderating but the data shows just how sticky inflation is and that requires the Fed to step it up a gear,” she added.
The outlook for further aggressive rate hikes has boosted the dollar, causing angst among major central banks that have seen their currencies weaken as this fuels imported inflation.
However, the news that the Bank of Japan had checked interest rates in apparent anticipation of a currency intervention caused the yen to rise by almost 1 per cent against the greenback.
The last time Japan intervened was in 1998, when the Asian financial crisis sparked a yen selloff and swift capital outflows.
“Verbal jawboning may help to slow the pace of yen depreciation but is not likely to alter the trend unless USD and UST yields decisively turn lower or BoJ changes or tweaks its policy,” OCBC’s Currency Strategist, Christopher Wong told Reuters.
