Stock Market India: Sensex falls over 150 points, and Nifty opens in the red
Indian equity benchmarks extending their losing streak to eight days in a row, ahead of the Reserve Bank of India’s rate decision, as a deep-sell of in global stocks hurt investors driven by central banks’ hawkish rhetoric, concerns about a potential global recession, and rising geopolitical risk.
The BSE Sensex index declines 262.73 points to 56,147.23, and the broader NSE Nifty index falls 70.4 points to 16,747.70, mirroring a sea of red in Asian bourses.
The top laggards among the 30 share Sensex group were Asian Paints, Tech Mahindra, Tata Consultancy Services, Infosys, Mahindra & Mahindra, and Hindustan Unilever.
Power Grid, Sun Pharma, Reliance Industries, and UltraTech Cement, on the other hand, were in the green.
“After US markets tumbled in overnight trades, key Asian indices are following suit and hence local equity gauges too are likely to drift lower in early trades Friday. Markets are expected to be volatile before the announcement of the RBI’s credit policy decision scheduled in the next few hours time today,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
Traders await the Reserve Bank of India’s policy decision at 10.00 am, with the central bank likely to announce a 50-basis-point rate increase for the third time in a row, driven by rising Treasury yields, aggressive Federal Reserve, and the resulting pressure on the rupee.
“Falling commodity prices offer some relief, but we think tighter global financial conditions and high inflation will lead the MPC to stick to its front-loaded tightening cycle,” economists at Barclays wrote in a pre-monetary policy note.
On Friday, Asian shares were on track to have their worst month since the COVID-19 pandemic began, n the wake of another plunge on Wall Street as fears in the currency and bond markets lingered.
After the S&P 500 plummeted more than 2 per cent to its lowest level since November 2020, shares in Japan, Australia, and South Korea all declined. The longest losing streak since September 2015 was predicted for an MSCI Asia-Pacific Equity Gauge, which would be its sixth straight weekly loss.
“The ‘troubling triad’ of rising rates, slowing growth, and strong dollar have all intensified,” Timothy Moe, Chief Asia-Pacific Equity Strategist at Goldman Sachs, told Reuters.
“We reduce our forecasts further and expect largely flat regional performance over the next two quarters with better returns on a 12-month view,” he added.
For almost the entire week, the CBOE Volatility Index has been well above 30, reflecting increased anxiety among equities investors. German inflation reached 10 per cent, more Federal Reserve officials expressed hawkish views, and market gloom was exacerbated by the UK government’s tax reform proposal.
Additionally, traders were apprehensive of a potential Chinese and Japanese intervention. According to a Reuters report, the Chinese central bank has instructed significant state-owned banks to be ready to exchange dollars for the local currency in international markets.
As markets in mainland China close for holidays the next week, the onshore yuan is expected to end a bad month, and things could get even worse for its less-regulated offshore exchange rate.
According to Bloomberg, Beijing would not be able to control investor expectations with its daily offshore yuan reference rate, which will make the drama worse.
“Our assumption is that the Chinese government will continue to fight this administratively as long as they can before they have to step in with direct intervention and have to start selling down US reserves,” Charlene Chu, senior analyst for Autonomous Research, said on Bloomberg Television.
