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US rate hike fears spook markets


The meltdown in the US markets on Wednesday on fears of aggressive interest rate hikes rattled domestic markets investors, with key indices plunging 2.61 per cent on Thursday. With the sell-off led by foreign investors sending the pivotals crashing, the benchmark Sensex plummeted 1,416.3 points to 52,792.23 and the NSE Nifty fell 430.9 points to 15,809.40.

The rupee, too, extended losses, falling another 10 paise to close at a record low of 77.72 against the US dollar on Thursday, weighed down by a negative trend in domestic equities and unabated foreign fund outflows.

Foreign portfolio investors (FPIs) pulled out another Rs 4,899 crore, taking the total outflows to Rs 42,836 crore in May. Domestic institutions bought stocks worth Rs 3,225 crore but failed to prevent the market slide. The Sensex has fallen 4,183 points in May alone. LIC shares fell by 4.05 per cent to Rs 840.75 as against the IPO offer price of Rs 949. RIL plummeted 2.35 per cent, SBI 2.24 per cent and TCS crashed 5.17 per cent.

Markets plunged sharply lower, pressurised by weak global cues. The meltdown in the US markets, on the fear of aggressive rate hikes, rattled investors and triggered a weak start. “The situation worsened further due to heavy selling in the index majors across sectors wherein IT and metal majors were among the top losers,” Ajit Mishra, VP – Research, Religare Broking Ltd.

The broader indices too traded in sync with the benchmark and lost in the range of 2.5-3 per cent.

Thursday’s fall indicates that bears are in control as the Nifty has completely reversed the recent gains and again reached closer to the March low. In this highly volatile market, investors can focus on sectors like FMCG, pharma, capital goods and manufacturing whose valuations are moderate and reasonable on a long-term basis, said Vinod Nair, head of research, Geojit Financial Services.

On Wall Street, key indices extended losses on Thursday as investors fretted over the impact of surging inflation on US economic growth and corporate earnings. At 2:32 pm ET, the Dow Jones fell 0.5 per cent to 31,318 while the S&P 500 dropped 0.2 per cent to 3,914.





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