Tech Mahindra and UltraTech Cement, each of which plummeted at least 4% were the two biggest losers from the Sensex pack.
The last session of the week witnessed Indian shares crashing on Friday, with equity benchmarks erasing gains for the week and extending their losses for the third successive 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 a day before, the BSE Senex index crashed 1,093.22 points, or 1.82%, to settle at 58,840.79, and the broader NSE Nifty-50 index declined 346.55 points or 1.94% 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,” Amol Athawale, Deputy Vice President for Technical Research at Kotak Securities said.
“We are likely to see strong bouts of volatility in the coming sessions as global slowdown looms large,” he added.
Tech Mahindra and UltraTech Cement, each of which plummeted at least 4% were the two biggest losers from the Sensex pack. Infosys, Mahindra & Mahindra, Wipro, TCS, Nestle, and Reliance Industries were some of the other companies to close in the red.
IndusInd Bank was the sole winner. “The Nifty Index lost around 1%t 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 percent on the day and was on course to post losses for a fourth straight session and mark the worst week since June.
Meanwhile, 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,” Bloomberg quoted Raphael Olszyna-Marzys, an economist at Bank J Safra Sarasin.”
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 stated it was too soon to predict if there would be a generalized worldwide recession, it said 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, was quoted saying by Reuters.
He further said, “I expect stocks to head back down to below their March lows. If you are in an environment where you have central banks that aggressively raise rates, historically, this has always led to bear markets.”
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