New Delhi: It was a terrible Thursday morning for domestic equity investors who woke up to a global carnage led by the US Fed's commentary on "persistent" inflation, its signal on rate hike and reaffirmation on halting bond buying program in March.
The admission that inflation is more persistent than previously thought showed a marked shift in the Fed's hawkishness that sent the dollar to a 23-month high, the US bond yield a notch higher and Asian peers to a 14-month low.
With crude oil prices also hovering around their highest levels since 2014, the writing was on the wall for domestic stocks, which lost Rs 3.8 lakh crore in market value within the first 5 minutes into trading.
By 9.20 am, the BSE Sensex had fallen 1,048.18 points to hit a low of 56,809.97. The NSE Nifty50 hit a low of 16,958.85, before recovering some ground. The index was still down 255 points at 17,022.25, ahead of the expiry on monthly futures and options contracts. The range of 17,000–16,800 is seen as a key support for the index. Jahangir Aziz of JPMorgan is expecting four rate hikes in 2022, followed by another four in 2023. Aziz told ET. Now that the Fed's commentary is hinting at the possibility of more aggressive rate hikes, He said quantitative tightening should not be seen as a substitute for rate hikes.
Fear gauge India VIX, which suggests the likely volatility over the next 30 days, jumped 7.3 percent to 22.92. Supply and demand imbalances related to the pandemic and the reopening of the US economy have continued to contribute to elevated levels of inflation," said foreign brokerage Nomura, which also released a report on the "probability of five Fed rate hikes this year."
Dr Reddy's Labs dropped 2.8 per cent to Rs 4,283. HDFC Bank declined 2.28 percent to Rs 1,453.40. Wipro, HCL Tech, Titan Company, HDFC, Nestle India, and Bajaj Finserv declined over 2 per cent each.
Axis Bank rose 0.5 per cent to Rs 755. Maruti Suzuki added 0.19 per cent to Rs 8,517. Many brokerages, including Emkay, Global have maintained a 'buy' rating on the stock post Q3 results, underpinned by expectations of a cyclical upturn and market share recovery. IndusInd bank added 0.03 per cent to Rs 883.
All eyes were on the IPO of Adani Group firm Adani Wilmar, which will open for subscription later in the day.