Indian shares crashed on Friday, with equity benchmarks erasing gains for the week and extending their losses for the third straight session, tracking a global sell-off after the International Monetary Fund and the World Bank warned of a looming recession from the broadest and most aggressive policy tightening in decades.After falling below the 60,000 mark on Thursday, the BSE Senex index crashed 1,093.22 points, or 1.82 per cent, to settle at 58,840.79, and the broader NSE Nifty-50 index declined 346.55 points or 1.94 per cent to close at 17,530.85, following a fall below 18,000 points in the previous session.
‘Indian markets were the worst performers in the Asian pack, as higher inflation and likely aggressive rate hikes by the US Fed sent stocks tumbling across the board,’ said Amol Athawale, Deputy Vice President for Technical Research at Kotak Securities.’We are likely to see strong bouts of volatility in the coming sessions as global slowdown looms large,’ he added. The two biggest losers from the Sensex pack were Tech Mahindra and UltraTech Cement, each of which plummeted more over 4 per cent. Infosys, Mahindra & Mahindra, Wipro, TCS, Nestle, and Reliance Industries were some of the other companies to close in the red.
The sole winner was IndusInd Bank. ‘The Nifty Index lost around 1 per cent in the past week. The Indian markets posted small losses on a relative basis on hopes of continued growth momentum, even as global and domestic data prints were adverse with elevated inflation reported across major economies,’ said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.
The MSCI world equity index, which tracks benchmarks in 47 countries, fell 0.5 per cent on the day and was on course to post losses for a fourth straight session and mark the worst week since June.
While a dollar gauge soared to a new record, reflecting bets for a jumbo-sized Federal Reserve interest rate hike next week.US futures fell, indicating no respite from the sell-off on Thursday, which caused the S&P 500 index to settle at its lowest level in over two months.’Everything points to another 75 basis-point rate hike by the Fed when it meets next week. The likelihood that it will have to go ‘big’ again in November is elevated, too,’ Raphael Olszyna-Marzys, an economist at Bank J Safra Sarasin, told Bloomberg. ‘What’s more, its new projections should indicate that the fight against inflation will be more painful than previously acknowledged.’
On Thursday, the Chief Economist at the World Bank expressed concern about slowing growth and rising inflation globally and warned of recession risks. While the International Monetary Fund said it was too soon to predict if there would be a generalised worldwide recession, it stated that downside risks continue to dominate the global economic picture.Retail sales in the UK decreased more than anticipated, which indicates that the economy is heading for a recession as the cost-of-living problem reduces people’s disposable income.’We’re now seeing data confirm that the economy is indeed slowing down,’ Axel Rudolph, market analyst at IG Group, told Reuters.
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