Mumbai: The equity markets plunged sharply on Monday in line with most other global markets after a US Federal Reserve official hinted about a possible interest rate hike as early as next week.
Mirroring the weakness in global stocks, the Indian markets opened the trading session deep in the red and traded downwards as selling pressure intensified in frontline banking, auto and capital goods stocks.
The Sensex slumped 443.71 points or 1.54 per cent to close the day at 28,353.54 while the Nifty ended the day at 8,715.60, down 151.10 points or 1.70 per cent.
“These are too early days to take a view and we will have to wait and see whether this is just a small correction or part of a broader correction in global markets on account of the risk-off trade following fears about an interest rate hike by the US Federal Reserve,” said Andrew Holland, CEO, Ambit Investment Advisory.
FPIs remained net sellers of equities for the second consecutive day. According to the provisional data released by the bourses, FPI’s offloaded shares worth Rs 593.61 crore on Monday.
While the shares of SBI slumped 4.28 per cent, the shares of M&M, Tata Motors, Axis Bank, L&T and NTPC plunged over 3 per cent on the BSE.
“Markets are likely to remain under pressure until more clarity emerges on the possible interest rate hike by the U.S. Federal Reserve,” added Mr U.R. Bhat, founder, Dalton Capital Advisors. However, he said there were also other factors that led to a rout in the Indian markets. “There were rumours that the advance tax payment by corporate India is slightly on the lower side raising concerns about India Inc’s earnings growth.
“Additionally, reports about the skewed distribution of the monsoon also impacted market sentiments. Expectations of a normal monsoon and earnings growth recovery were the main factors that led to the recent rally on the domestic bourses,” said Mr Bhat.
Major Asian markets closed sharply down. The Hang Seng Index was the biggest loser in the Asia-Pacific region, down 3.36 per cent while the Kospi Index and SET Composite Index dropped 2.28 per cent and 2.31 per cent respectively.
