MUMBAI: The Indian equity markets sank in line with most other emerging markets wiping out around Rs 3 lakh crores of investor wealth in a single day after a sudden spike in the US bond yields to a 10-month high signalled a possible interest rate hike by the US Federal Reserve. The markets fears that the policies proposed by the newly-elected US president would stoke inflation that would prompt the US central bank to increase rates.
This according to market participants dented global investors’ sentiments towards the emerging markets, which was a major beneficiary of the ultra-low interest rate regime in the US. The Sensex plunged 698.86 points or 2.54 per cent to end the day at 26,818.82 while the Nifty closed the session at 8,296.30 down 229.45 points or 2.69 per cent. This was the biggest fall in the markets since February 11. In the Asia-pacific region, the Indonesian market was the most hit with the Jakarta Composite Index plunging as much as 4 per cent while Taiwan SE Weighted Index and Hang Seng slumped 2.12 per cent and 1.35 per cent respectively.
The Indian rupee too witnessed heavy selling pressure and closed near its 15-week low at 67.25 per dollar, down 0.92 per cent from its previous sessions close of 66.63. As per the provisional data released by the stock exchanges, FPIs pulled out '1,493.27 crores on Friday. “Markets fear that Mr Trump’s growth oriented policies may lead to a rise in the commodity prices,” said Vaibhav Agrawal, Angel Broking.
