Indian equity benchmarks plunged on Monday and the rupee hit a record low ahead of inflation data.
Indian equity benchmarks plunged on Monday, the rupee hit a record low as surging US inflation data, and a COVID-19 warning from Beijing roiled global markets, with traders waiting for May consumer price data for further cues.
Investor concerns led to global risk aversion, pushing down equity markets across the region, with the BSE share index and the NSE share index trading over 2.5 per cent lower.
The 30-share BSE Sensex plunged 1456.74 points to close at 52,846.70 today, while the broader NSE Nifty was down 2.6 per cent to close at 15,774.4, its lowest level since July 2021, as investors awaited inflation data.
"Inflationary pressures are real, and recent earnings by US companies have shown that it has become difficult to pass on that high inflationary pressure," Saurabh Jain, assistant vice president, SMC Global Securities, told Reuters. "Investors fear that we are heading to a recession."
Bajaj Finserv, Bajaj Finance, IndusInd Bank, Tech Mahindra, ICICI Bank, TCS, NTPC, Infosys and State Bank of India were the major laggards in the Sensex pack.
"The Indian market's valuations continue to be uninspiring, especially of consumption sectors and 'quality' stocks," Shrikant Chouhan, head of equity research (retail) at Kotak Securities, told Reuters.
"Financials remain one of the few patches with reasonable valuations, but they too will struggle if India's macro-economic position was to deteriorate further."
Leading sectoral losses in Mumbai trading, information technology stocks on the Nifty dropped 4.1 per cent. Sector heavyweights Infosys Ltd and Tata Consultancy Services fell 3.5 per cent and 4.2 per cent, respectively.
Bajaj Finserv and Bajaj Finance were the top losers on the NSE, declining about 7 per cent and 5 per cent, respectively. The NSE bank index sank 3.1 per cent.
Bajaj Finserv was the top loser in the Sensex pack, skidding 7.02 per cent, followed by Bajaj Finance, IndusInd Bank, Tech Mahindra, ICICI Bank, TCS, NTPC, Infosys and SBI.
Investor wealth tumbled by over ₹ 6.6 lakh crore in Monday's session, with the market capitalisation of all BSE-listed firms dropping to ₹ 2,45,19,673.44 crore.
The BSE benchmark had ended 1,016.84 points or 1.84 per cent lower at 54,303.44 on Friday. The broader NSE Nifty had plunged 276.30 points or 1.68 per cent to 16,201.80.
"Weak global cues ahead of the Fed meet painted benchmark indices here in a sea of red as street awaits CPI data today on a day when the rupee hit a new low. The risk off mode in equities globally after the US inflation print raised fears of an aggressive rate hike..." S Ranganathan, Head of Research at LKP Securities, told PTI.
The rupee touched a lifetime low of 78.29 to the dollar while the benchmark 10-year bond yield hit 7.60 per cent, its highest since February 28, 2019.
All eyes will now be on retail inflation data for Asia's third-largest economy due later in the day.
A Reuters poll of private economists found that the consumer price index-based inflation slipped modestly in May but stayed well above the Reserve Bank of India's upper tolerance limit for a fifth consecutive month.
World stocks fell towards fresh 2022 lows, and the Japanese yen slid to levels not seen in nearly a quarter of a century on Monday as red-hot US inflation fuelled worries about even more aggressive policy tightening in a big week for central banks.
The substantially higher-than-expected US inflation print, the fastest in over four decades, was hard to digest for investors, who sold both bonds and equities and quashed expectations that policymakers were starting to gain the upper hand in capping soaring prices.
