NEW DELHI: Domestic stocks on Monday joined the global rout, sinking over 2 per cent, as data showed US inflation at fresh 40-year high in May at 8.6 per cent, weakening the narrative of ‘peaking inflation’ and opening up doors for aggressive Fed rate hikes ahead.
Adding fuel to the fire was a Covid outbreak that emerged in Beijing’s most populous district of Chaoyang, where three rounds of mass testing has been announced, spurring lockdowns and growth concerns.
Asian markets were all in the red, falling up to 2.7 per cent. US stock futures fell 1.3 per cent. India was no exception.
By 9.20 am, the BSE Sensex fell below the 53,000 mark and was trading over 1,400 points or 2.66 per cent lower at 52,860.68. Nifty50 was trading at 15,779.50, down over 400 points or 2.61 per cent. Midcap and smallcap indices declined up to 2.2 per cent.
Among Sensex stocks,
plunged 3.43 per cent to Rs 5,473. tanked 3.31 per cent to Rs 11,845. dropped 3.30 per cent to Rs 1,734. , , and slid over 3 per cent each. Larsen & Toubro, , and fell up to 3.1 per cent. , , and were some other Sensex losers, falling up to 2.7 per cent.
Overall, four stocks on BSE declined for every one that advanced. A total of BSE 168 stocks had hit their respective lower circuits.
Real estate, bank and metals stocks were worst hit, with the sectoral indices falling up to 3.5 per cent. Real estate stocks such as Godrej Properties, DLF, Indiabulls Real Estate and Sobha fell 4-6 per cent. Metal stocks Hindalco, SAIL, Vedanta and Jindal Steel plunged up to 4.3 per cent. Among banks, Bank of Baroda was worst hit, falling 5.09 per cent to Rs 99.75.
The US Fed will review its interest rate policy on June 14-15 and there are expectations that it will increase interest rates by 50 basis points this time.
According to Nomura India, “Friday’s hotter-than-expected month-on-month core CPI print in the US means that the peak-inflation narrative, for now, is delayed with the Fed likely to remain on the hawkish path until monthly inflation shows clear signs of sequential slowing.”
The FOMC will be the main event coming week, where our economists look for 50bp hike and Chair Powell likely signalling a fourth 50bp hike in September, it said.
Global weakness dampened domestic sentiment, even as data last week showed the domestic factory output growth climbed to an 8-month high of 7.1 per cent in April.
More to come…
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