Indian stock indices plunged Thursday morning tracking weak global benchmark US markets, which fell as its central bank Federal Reserve said another hike in interest rate may be needed to tame inflation and bring it to 2 per cent target.
Sensex and Nifty were 0.3-0.4 per cent lower from their previous day’s closing at the time of writing this report. Among the Nifty sectoral indices, Nifty FMCG and Nifty IT were the top losers, while Nifty PSU bank, and Nifty consumer durables were the top gainers.
At 10:25 am, Sensex was trading 237.05 points lower at 65,302.37, whereas Nifty was trading 77.30 points down at 19,387.70.
Minutes of the July monetary policy review meeting of the Us central bank showed most participants continued to see significant upside risks to inflation, noting that a further tightening of monetary policy may be needed.
The US central bank in its July meeting raised its benchmark interest rate by 25 basis points, the highest in the past 22 years at 5.25-5.5 per cent.
“Global cues for markets continue to be weak. There are two negatives weighing on global stock markets now: One, the US Fed minutes indicate that one more rate hike may be needed in this rate hiking cycle to tame inflation,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
“Two, Chinese macro data indicate that the economy is slowing more-than-feared earlier, and this will impact global economic growth. In this scenario the Indian market is unlikely to break out to newer highs on a sustained basis and decouple from the rest of the world. However, a sharp correction appears unlikely,” Vijayakumar said.
He added foreign institutional investors are unlikely to pour more money into the Indian markets as they did in June and July.
Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the past few straight months, according to data from the National Securities Depository (NSDL). FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, Rs 47,148 crore, and Rs 46,618 crore in March, April, May, June, and July, respectively, data showed.
In August, however, they are thus buying at a slower pace totalling just Rs 737 crore. (ANI)
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