The Indian equity benchmarks crashed in line with global markets as rising interest rates in Europe and US sparked fears of world economy entering into a phase of recession. The Sensex dropped 1,138 points and Nifty 50 briefly tumbled below its important psychological level of 17,300.
The Sensex fell 1,021 points to settle at 58,099 and Nifty 50 index dropped 302 points to close at 17,327.
Global stocks fell for a third day Friday after more rate hikes by the Federal Reserve and other central banks to control persistent inflation spurred fears of a possible global recession.
London and Frankfurt opened lower. Shanghai, Hong Kong and Seoul declined. Oil prices fell by more than $1 per barrel. Japanese markets were closed for a holiday.
Wall Street futures were lower following rate hikes Thursday by central banks in Britain, Switzerland, Turkey and the Philippines. The Fed hiked its key rate on Wednesday for a fifth time this year and indicated more rises were on the way.
The Federal Reserve delivered its bluntest reckoning Wednesday of what it will take to finally tame painfully high inflation: Slower growth, higher unemployment and potentially a recession.
Speaking at a news conference, Chair Jerome Powell acknowledged what many economists have been saying for months: That the Fed’s goal of engineering a “soft landing” — in which it would manage to slow growth enough to curb inflation but not so much as to cause a recession — looks increasingly unlikely.
“The chances of a soft landing,” Powell said, “are likely to diminish” as the Fed steadily raises borrowing costs to slow the worst streak of inflation in four decades. “No one knows whether this process will lead to a recession or, if so, how significant that recession would be.”
Back home, selling pressure was broad-based as all the 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty PSU Bank index's 4 per cent fall. Nifty Media, Financial Services, Auto, Metal, Private Bank and Oil & Gas indices also fell between 1.75-3 per cent.
Mid- and small-cap shares also faced selling pressure as Nifty Midcap 100 and Nifty Smallcap 100 indices also tumbled over 2 per cent each.
Power Grid, Hindalco, Apollo Hospitals, Adani Ports, NTPC, UPL, State Bank of India, Bajaj Finserv, Mahindra & Mahindra, IndusInd Bank and Bajaj Finance fell between 3-8 per cent.
On the flipside, Divis Labs, Sun Pharma, Cipla, Tata Steel and ITC were among the notable gainers.
The overall market breadth was extremely negative as 2,472 shares ended lower while 1,002 ended higher on the BSE.