Sensex Flashes Red, A Day After Crashing To Over A Year Low

Indian benchmark stock indices extended losses to a sixth straight session on Friday and were set for their worst week in over two years, a day after plunging to the lowest in over a year, tracking world equities headed for their worst week since a market meltdown in the beginning of the pandemic in March 2020.

Across-the-board selling played havoc on the headline indices on Thursday, with the 30 stock S&P BSE Sensex and the broader NSE Nifty crashed for the fifth straight day to their lowest in over a year, as investors feared sharp rate hikes would tip economies into recession.

Underscoring the gloom in global stock markets overnight, the Sensex opened lower by over 250 points to trade at about 51,244 and the Nifty fell nearly 0.5 per cent to about 15,292.

The blue-chip indexes are set for losses of over 5 per cent in the week with the US Federal Reserve hiking interest rates by 75 basis points and the Swiss National Bank in a surprise move, delivering its first rate hike in 15 years.

If losses continue for the day, the Nifty and Sensex would suffer their worst week since May 2020.

The Nifty IT index was among the worst performing sub-indexes on Friday, falling up to 1.9 per cent to its lowest in over a year. The index, which tracks IT majors including Wipro, Infosys and Tata Consultancy Services, is set for a weekly drop of around 8 per cent.

World stocks plummeted again on Thursday, with the MSCI’s gauge of stocks across the globe slumped 2.25 per cent to hover near a 19-1/2-month low, and were headed for their worst week since markets’ pandemic meltdown in March 2020.

In New York, the Dow Jones Industrial Average dropped 2.5 per cent, the S&P 500 shed 3.3 per cent and the Nasdaq Composite slumped 4.1 per cent. All three indices were trading at their lowest in at least 1-1/2-years.

“After yesterday’s drubbing, markets may exhibit caution in early trades with the undertone continuing to remain bearish following overnight slump in US markets. Investors remain concerned that central banks’ commitment to bringing inflation down will seriously damage a fragile economic recovery,” said Prashanth Tapse, Vice President of Research at Mehta Equities.

“Further, crude oil prices are at $115 a barrel which is way above the assumption of $105 a barrel made by the RBI for its full-year inflation projections. The net outflow by foreign institutional investors (FIIs) from equities has reached ₹ 1.81 lakh crore so far in 2022, while in the June month so far, FIIs have net sold ₹ 34,270 crore, which is creating uncertainty amongst the investors.”