As a result, as Asia opened deep in the red, the sensex opened weakly and lost over 1,400 points by mid-term, but bargain-hunting in late trades helped it to close with a loss of 581 points, or 1%, at 57,277. IT stocks, along with Reliance Industries, contributed the most to the day’s decline, while buying in bank stocks cushioned the drop in some extent, according to BSE data.
Apart from stocks, bonds and the rupee were also hit following the US Fed statement. Indian government bonds also saw a sell-off with the benchmark yield nearing the 6.75% level, a two-year high, while the rupee weakened below 75 to the dollar as fears about the withdrawal of foreign funds from the stock market were growing. .
BSE data showed that overseas funds were net sellers at Rs 6,267 crore on Thursday. Since there has been talk for some time of the US Fed pulling out of its bond-buying program, foreign portfolio investors (REITs) have been pulling money out of India, according to the players. of the market. As a result, so far this month, net sales of foreign funds in the stock market amount to almost 29,000 crore rupees (nearly $3.9 billion), according to the combined data from the ESB and CDSL. It is the highest monthly net drawdown for equity REITs since March 2020, when at the start of the Covid pandemic the sensex plunged more than 40% in less than three weeks.
According to S Ranganathan, head of research at LKP Securities, even though the US Fed left its key interest rates near zero, its hawkish commentary quickly swept away the gains in global markets, causing indices to open lower. in the country. “As FPI continued to post profits on Indian (equities), value stocks made a comeback with the PSU Bank index climbing more than 5% (Thursday afternoon), supported by auto stocks , to engineer a smart recovery,” Ranganathan wrote in a market post.
The day’s fall also left investors around Rs 2.8 lakh crore poorer with BSE’s market capitalization now at Rs 263.2 lakh crore, according to official data.
In the government bond market, the yield on the benchmark 10-year index reached almost 6.75%. Against this backdrop, bond brokers said the government’s planned Rs 24,000 crore bond auction on Friday will be interesting to watch. On the one hand, bond buyers would prefer to buy bonds at a lower price (which would push yields higher), while the RBI might be more inclined to control yields.
In the foreign exchange market, the rupee slipped 29 paise to close again below 75 to the dollar, at 75.07.