Markets: Post-US Fed rate cuts, global, Indian stocks sink more than 1%
Virendra Pandit
New Delhi: With the US Federal Reserve cutting its benchmark interest rates by 25 basis points on Wednesday, to a target range of 4.25 to 4.50 percent, several stocks in global markets sank on Thursday, with Sensex and Nifty shares losing 1.2 and 1.02 percent of their values in India.
Amid the ongoing bear attacks, the BSE Sensex fell 964.15 points or 1.20 percent to close at 79,218.05, while the NSE Nifty declined 247.15 points or 1.02 percent to 23,951.70.
With the US Fed projecting only two rate cuts rather than the four expected for 2025, optimism tempered and the markets opened significantly lower. Sensex started at 79,029.03 compared to its previous close of 80,182.20, Market breadth remained negative with 2,320 stocks declining versus 1,553 advances on the BSE.
The Thursday session saw 189 stocks hitting 52-week highs while 50 touched their lows. Circuit filters were triggered for 278 stocks on the upper end and 191 on the lower end.
The drop in the Indian stock market came amid a similar downturn in the US as well as Asian markets after the US Fed delivered its third consecutive rate cut but signaled a slowdown in future reductions, leaving investors jittery.
Foreign institutional investors (FIIs) continued selling Indian equities, with FIIs selling shares worth Rs 1,316.81 crore on Wednesday. The dollar index rising above 108 and the 10-year bond yield spiking to 4.52 percent are seen as temporary negatives from the perspective of FII fund flows.
Analysts say the markets with high valuations are getting spooked as reality is falling short of its expectations and the US Fed’s guidance of fewer rate cuts in 2025 is one such instance that disrupted market expectations.
The index heavyweights that pulled the BSE Sensex down on Thursday in terms of contribution included HDFC Bank contributing 173 points, Infosys (150 points), ICICI Bank (112 points), and Reliance Industries (98 points). At least 26 out of 30 blue chip stocks were in the red zone on the BSE Sensex with Infosys being the top loser falling 2.82 percent, followed by HCL Tech (down 2.1 percent), Asian Paints (minus 2 percent), Tata Steel (minus 1.9 percent), Tech Mahindra (down 1.8 percent) and Kotak Mahindra Bank (down 1.7 percent).
ITC, HUL, Bharti Airtel, and Sun Pharma, however, rose up to 1 percent on the BSE Sensex.
Among sectoral trends, all sectors traded in negative with IT under severe pressure falling 2.11 percent in intraday deals. Individually, LTIMindree fell sharply by 4.35 percent, followed by Wipro (down 3 percent), Mphasis (down 2.7 percent), and Persistent Systems (down 2 percent), among others.
Some global markets reacted similarly. Wall Street reacted negatively to the hawkish US Fed commentary, with the Dow Jones falling 2.58 percent for its tenth straight session, the S&P 500 dropping 2.95 percent, and the Nasdaq declining 3.56 percent.
Asian markets also traded lower, with Japan’s Nikkei down 0.80 percent, China’s CSI 300 slipping 0.47 percent, Shanghai flat with a slight negative bias, and Hong Kong’s Hang Seng falling 1.28 percent following a 25 bps rate cut by the Hong Kong Monetary Authority.
