The 30-scrip sensitive index Sensex and broader 50-scrip Nifty on National Stock Exchange fell sharply on Thursday as the US Fed signalled that it might tighten monetary policy in March on concerns over inflation, analysts said.
In its meeting on Wednesday, the Federal Open Market Committee kept its policy interest rate “near zero” and stated its expectation that an increase in this rate would “soon be appropriate”.
Accordingly, Sensex settled at 57,276 points, down 1 per cent or 581 points from its previous close, whereas Nifty settled at 17,110 points, down 1 per cent or 167 points from its previous close.
“The fall in the Indian markets is in line with the global markets. The markets were eagerly awaiting the outcome of the US Federal Reserve meeting on monetary policy which was held on January 25-26,” said Sameer Kaul, MD and CEO, TrustPlutus Wealth.
“The combination of these measures is what has spooked the markets globally as it would mean moving from a scenario of easy and excess liquidity to a scenario of liquidity tightening,” Kaul added.
He also suggested investors to stick to their asset allocation and invest in high-quality companies and also to pay close attention to valuations.
Nifty IT, pharma, realty and consumer durables slumped the most on Thursday, while PSU bank jumped sharply.
On the stock-specific front, HCL Technologies, Tech Mahindra, Dr Reddy’s, TCS, and Wipro were the top five losers, declining 3.9 per cent, 3.6 per cent, 3.4 per cent, 3.1 per cent and 3.1 per cent, respectively.
Axis Bank, SBI, Cipla, Maruti Suzuki, and Kotak Mahindra, on the contrary, were the top five gainers during the session.
“As FPIs continued to book profits from Indian equities, value stocks made a comeback with the PSU Bank Index rallying over 5 per cent in afternoon trade on Thursday, well supported by auto stocks to stage a smart recovery,” said S. Ranganathan, Head of Research at LKP securities.
“As IT and pharma stocks witnessed profit taking, textile stocks were sought after in the broader market on the back of earnings,” Ranganathan added.