Sensex Falls Over 200 Points To Stall A Four-Day Rally On Global Sell-Off

Indian equity benchmarks fell early on Thursday, stalling a four-day rally and reflecting a broader pessimistic sentiment as US Treasury yields rose on concerns that the Federal Reserve would continue to raise interest rates aggressively, hurt global risk assets’ recent rebound.

The BSE Sensex index fell more than 230 points and the NSE Nifty index opened lower, reflecting the sea of red in global stocks.

This week’s shocking inflation reports from Canada, Britain, and New Zealand also demonstrated that central banks around the world are still far from controlling decades-high inflation, even at the expense of stifling economic growth, stoking recession fears, and increasing demand for safe-haven assets.

The risk-off sentiment led to a decline in Asian stock markets on Thursday, with the MSCI’s broadest index of Asia-Pacific shares outside Japan falling to more than two-year low as the US 10-year Treasury yield touched a fresh 14-year high, brushing off a weak housing report.

As US yields spiked, demand for the greenback rose, and domestic dealers noted significant corporate dollar withdrawals on the market, the Indian rupee breached the crucial 83-to-dollar level and dropped to a new record low.

“Yields rose to fresh cycle highs and risk appetite soured,” said Taylor Nugent, a Markets Economist at National Australia Bank in Sydney, adding that hawkish commentary from central banks also weighed on sentiment, according to Reuters.

Shares fell in China, Australia, and Japan, while Hong Kong’s market benchmark was on track to close at its lowest level since 2009.

After Wall Street snapped a two-day streak of gains on Wednesday, US equity futures dipped in Asia, making any predictions for a bottom appear unlikely.

Even strong earnings from United Airlines Holdings and Netflix in the US couldn’t convince investors that the S&P 500 would continue to rise. An afternoon stock crash in Tesla due to weak sales could worsen the mood.

“As we look at third-quarter results, we think there are going to be more misses than the market is currently expecting,” Ellen Hazen, Chief Market Strategist at F L Putnam Investment Management, said on Bloomberg Radio.

“If you look at GDP for this year, it keeps getting revised downward and it’s really hard for companies to keep growing their earnings in the face of that.”