Fed-induced meltdown blows away stock markets
By S Jha
New Delhi, September 23: The US Fed storm for second day in a row swept away the Indian equity markets in line with similar routs in the global bourses.
The Sensex tanked by 1020 points, while Nifty also slumped by a whopping 302 points.
The US Fed had hiked the interest rate by three quarters to a point, and gave a hawkish commentary on the state of inflation that suggested the rate hike spree may continue until next year.
There was no respite on the Indian bourses, tiring the traders with relentless institutional selling of the Indian equities.
The foreign institutional investors (FIIs), which had sold India for 15 months before turning green this month, resorted to heavy selling for a second day in a row. While the FIIs had a net sell of over Rs 2100 crores pn Thursday, they again sold a net of Rs 2300 crores on Friday.
Domestic Institutional Investors (DIIs), as had been the case on Thursday, couldn’t match the scale of dumping by the FIIs, as they merely bought a net of Rs 299 crores.
The panic-stricken investors are emerging wary of the fact that the energy prices could remain firm amid worsening Russian-Ukraine war, which can plunge whole of Europe in a serious energy crisis in the next few months as Winter would be approaching there. Besides, the fear of the US entering into recession is also weighing high on the FIIs, who are seeking to take advantage of a strong dollar for re-investment options in the US.
The IT shares, particularly Infosys and HCL Technology sought to shrug off the collective doom on the bourses, but they could not sustain the turnaround.
It may be noted that the share prices of IT companies are generally seen to be reacting positively whenever rupee depreciates, which in fact boosts the earnings of such companies.
The pharma stocks such as Cipla, Sun Pharma and others remained firm in line with a new trend on the bourses, as investors seek to take cover with the defensive stocks amid the meltdown. The FMCG counter was also green, with ITC sticking firmly with its upward trend.
The banking sector bore the full brunt of the equity rout, with heayweights such as HDFC Bank, Kotak Mahindra Bank and others heavily losing on the bourses on Friday.
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