The Indian equity benchmarks crashed on Friday mirroring losses in global markets ahead of US inflation data due later in the day which stoked fears of liquidity tightening by the US Federal Reserve to control spiralling inflation, analysts said. Meanwhile, the Indian rupee falling to an all-time low against the US dollar also dampened investor sentiment, analysts added. The Sensex fell as much as 1,025 points and Nifty 50 index broke below its important psychological level of 16,200.
As of 1:40 pm, the Sensex was down 1,006 points or 1.8 per cent at 54,314 and Nifty 50 index tumbled 274 points or 1.66 per cent to 16,204.
The Indian rupee fell as much as 8 paise to hit an all-time low of 77.82 against the US dollar. Depreciating rupee does not augur well for Indian economy as it will increase the import bill of the country. That along with rising crude prices will massively increase the import bill as India imports more than 80 per cent of crude oil requirements.
“Rupee hit its fresh all time low but in the last few sessions has been very resilient and is consolidating in a narrow range despite volatility in domestic and global equities and strength in the dollar against its major crosses. On the domestic front, RBI has been very actively intervening and curtailing the volatility for the rupee. Global crude oil prices have been rallying thereby putting pressure on inflation and leading to higher trade deficit. Dollar is getting support at lower levels ahead of US inflation number that will be released today and FOMC policy statement that is scheduled next week. Expectation is that the Fed could continue to raise rates and maintain its hawkish stance. We expect the USDINR (Spot) to trade with a positive bias and is gradually headed towards 78.50 levels. On the downside 77.20 will continue to act as an important support in the short term,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Selling pressure was visible across the board as all the 15 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty IT index's 2 per cent decline. Nifty Oil & Gas, Private Bank, Metal, Media, Financial Services and Bank indices also fell between 1.5-2 per cent.
Mid- and small-cap shares were also facing selling pressure as Nifty Midcap 100 index declined 0.7 per cent and Nifty Smallcap 100 index fell 1 per cent.
Bajaj Finance was top Nifty loser, the stock fell 3.5 per cent to Rs 5,690. Kotak Mahindra Bank, HDFC, Hindalco, Wipro, Tech Mahindra, Reliance Industries, Infosys, HDFC Bank and Tata Steel also fell between 1.7-3.4 per cent.
On the flipside, Asian Paints, Tata Consumer Products, Apollo Hospitals, Grasim Industries, Dr Reddy's Labs, Britannia Industries and Ultratech Cement were among the gainers.
The overall market breadth was negative as 1,992 shares were declining while 1,210 were advancing on the BSE.