Stock Market: Terminal Fed fear kicks bourses off cliffs

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Fed meeting brings fear factor amid hot job wage data in US

By S Jha

New Delhi, May 1: The global equity markets saw major selloff yesterday. Dow Jones tumbled by over 500 points. S&P, NASDAQ, and other indices were deep into reds.

The global equity markets crashed yesterday after the US wage report card was released. The employment cost data showed a sharp uptick. This was much higher than the anticipation of the street.

The bond yields shot above the five per cent mark. This was too hot for the equity markets. The data release coincided with the US Federal Reserve meeting on Wednesday on policy rates.

The hot US employment cost data first shook the Asian indices. Bank Nifty had been soaring yesterday amid short covering. But the index took dramatic turns in the last half an hour. It dived by more than 600 points.

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Nifty also lost a whopping 200 points from the day’s high in the yesterday’s session. Sensex too ended in the deep red.

The small cap and the mid cap too were bleeding. Several of the runaway stocks were trading lower. Investors resorted to book profits in stocks which had been multibaggers in the last few months. The likes of Waaree Renewables and KPI Green Energy were locked in lower circuits.

Even while the indices were in deep reds, there were a few scrips who shined. The power sector has been a theme on the street for several months.

Power Finance Corporation (PFC) and Rural Electrification Corporations (REC) made handsome gains on Tuesday. The Indian indices are closed on Wednesday on account of May Day.

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REC gained almost nine per cent. PFC also gained more than six per cent. Both are accessing cheap credits to fund renewable energy projects. Investors are hoping that both REC and PFC may replicate success of IREDA.

Power Grid Corporation was also among the top gainers on the street. The large cap power firm as per market participants has given a major breakout. It traded above ₹300 for the first time.

Transformers’ manufacturers have also been buzzing on the street. Shilcher Technology stayed firm above ₹6000 level while turning a multibagger in a short span of time.

The global equity markets tumbled amid fear that the US Fed may hold the policy rates high for a long span of time. Hopes of three rate cuts this year are now fast fading away.

(Disclaimer: This article makes no recommendations for buy or sell of shares of any company)