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Rs 2.9 lakh crore wiped off as D-St’s new year party fizzles out on Fed fear

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NEW DELHI: After being in the green zone for two days, panic gripped Dalal Street today as the new year party fizzled out ahead of the release of US Federal Reserve minutes tonight. Equity indices closed in the red on Wednesday owing to heavy selling across all sectoral indices.

The BSE Sensex ended 636 points or 1.04% lower at 60,826, and Nifty 50 closed with cuts of 190 points or 1.04% at 18,127. Investors were left poorer by Rs 2.91 lakh crore as the market capitalisation of all BSE- listed companies declined to Rs 281.74 lakh crore.

From the Sensex pack, Tata Steel, Tata Motors, Wipro and Power Grid were the top losers, falling over 2%. Infosys, HDFC Bank, Reliance, HDFC, IndusInd Bank and ITC also closed lower.

On the other hand, Maruti and TCS are the only stocks that managed to close with gains.

Sectorally, the Nifty Realty fell 2.27% and Nifty Metal declined 1.24%. Auto, banks, financial services, pharma, consumer durables, oil & gas, FMCG and IT stocks also closed with cuts. Whereas, in the broader market, Nifty Midcap50 declined 1.23% and Smallcap50 1.07%.

“The domestic market, affected by the worries in the global market, traded with deep cuts. Fears over aggressive rate hikes resurfaced ahead of the release of Fed meeting minutes, a meeting that left the door open for additional hikes,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Apart from global cues, the domestic market will pay close attention to corporate earnings. India’s services PMI expanded to 58.5 in December owing to stronger growth in new business,” Nair added.
Earlier Asian markets ended on a mixed note, Japan’s Nikkei 225 fell 1.45%, while China’s Shanghai Composite surged 0.22% and South Korea’s Kospi rose 1.68%.

The rupee edged higher against the dollar on Wednesday, propped up by a slide in oil prices and the dollar index. The rupee ended at 82.80 per dollar, having firmed to as much as 82.75 during the session. The Brent crude March futures declined 2.29% to $80.22 per barrel.

The market breadth was skewed in favour of bears. About 2,266 stocks declined, 1,228 gained and 133 remained unchanged.

Bears ruled the Street even as the decline in US 10-year bond yield to 3.75 % and Brent declining to $81 are positives for investors.

Here are 6 key factors dragging Sensex and Nifty lower today:

1) Fed minutes

Investors are anxiously awaiting the release of Fed minutes of the December meeting, which would hint whether the US central bank has slowed down its tightening path. “Inflation might prove to be harder to bring down and that should keep the risks elevated that the recession that hits the US economy could be harsher than what most are anticipating. The Fed will remain loud and clear that a lot of work remains to bring down inflation,” said Edward Moya of OANDA.

2) US recession

The fears of recession in the US and Europe remain the No. 1 risk for investors in 2023. With the increasing fears around recession, gold prices hit a 6-month high in the international market on Tuesday.

3) Technical factors

Technical analysts said the 18,000 level remained as the crucial support zone for Nifty. Nifty’s biggest make-or-break intraday support is now placed at 17971 mark. Yesterday’s chart setup didn’t indicate any directional move.

“Over the short term, the index is likely to move within the range of 17,950-18,400. A breakout on either side will confirm a directional move,” said Rupak De, Senior Technical Analyst at

.

4) Global markets

US stocks edged lower on Tuesday with the biggest drags from Tesla and Apple, finishing up the new year’s first trading session with an all too familiar 2022 pattern of volatile moves that trend downward amid worries about high inflation and a possible recession.

The S&P 500 fell 0.40% while the Nasdaq Composite dropped 0.76%.

In Asia, Japan’s Nikkei lost 1.12%, while Australia’s resource heavy S&P/ASX 200 index rose 1.63%.

5) FII selling

According to preliminary data made public on the NSE, foreign institutional investors (FII) were again on the sell side in yesterday’s trade, bringing their last seven days of selling to the tune of Rs 6,605 crore.

6) Rupee

The Indian rupee was trading marginally down in the spot market at 82.87 against the US dollar today. The domestic currency had fallen almost below the 83-level following a rally in the US dollar index.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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