Nifty and Sensex extend losses, driven by global sell-off on interest rate concerns


Nifty and Sensex extend losses, driven by global sell-off on interest rate concerns

India Stock Market- Sensex down more than 400 pips in early trade

Stock indices retreated on Wednesday, extending losses from the end of the previous session, led by the selling of global stocks as concerns of raising interest rates returned to the fore after strong US data that reinforced the Fed’s hawkish view despite the spreading economic gloom.

The BSE Sensex Index fell 474.1 points to 58,722.89 in early trading, and the NSE Index fell 171.3 points to 17,484.30.

The Nifty Tech and Bank indices were down about 0.9 percent each.

Ahead of the market opening, Prashanth Tapsi, senior vice president of research at Mehta Equities, said, “Local stocks are likely to join the global market slump in early trading Wednesday, amid recurring concerns about major central banks tightening interest rates to tackle rising inflation that could lead to Global slowdown And fears of recession are getting stronger after Russia continued to cut off important oil supplies to European countries.

“Besides this, the strengthening of the dollar, hawkish bets by the Federal Reserve and the shutdown of the new COVID-19 in China may also affect sentiment,” he added.

A gauge of Asian stocks fell to its lowest level since 2020 as stocks fell from Tokyo to Sydney and Chinese technology companies sank.

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“Many investors are walking on eggshells,” Kristina Huber, chief global market strategist at Invesco, said on Bloomberg TV. “The real problem is that it could be one or two punches. We can see the Fed continue to hit the economy with massive rate hikes, let’s say 75 basis points, and then of course we get bearish reviews of important earnings.”

MSCI’s largest index of Asia-Pacific shares outside Japan fell 1.5 percent in early trade, reflecting declines on Wall Street, and Japan’s Nikkei index opened 1.12 percent lower.

US and European futures were negative, a day after the S&P 500 fell but managed to stay above the critical threshold of 3900.

“US stocks came back from their holiday yesterday, but the mood remained gloomy… The session wasn’t particularly harsh. Both indices fell at the open and stayed lower. Stock futures remain in the red today, so slow bleeding in stocks is slow,” said Robert Carnell, president. ING’s Asia Pacific Regional Research Center- “It looks like it will continue today.”

According to data released overnight, the US service sector expanded for the second month in a row in August thanks to increased demand and employment growth.

That supported the notion that there was no recession, but it also raised concerns that the Fed won’t reduce the pace of interest rate hikes any time soon.

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The good news for the real economy is now bad news for the market – for both bonds and the stock market – Redmond Wong, a strategist for major China markets at Hong Kong-based Saxo Capital Markets, told Reuters.

Weaker-than-expected jobs data last week raised hopes that the Fed might consider a soft landing with a slower rate hike, but “that hope has faded a lot again” in the new set of numbers, he added.

“The investors we spoke to … have lost a lot of confidence in the (stock) market,” Wong said, adding that investors have shown renewed interest in high-quality bonds to earn cash flow from coupons.