Stocks snap 3-day rally over Fed rate hike, gloomy macro data

Equities reversed a three-session winning run on Thursday after the US Fed raised interest rates and struck a hawkish stance, souring appetite for emerging market assets.

Trading sentiment was further dented after official data showed wholesale inflation shot up to a 14-month high of 4.43 per cent in May, while the current account deficit (CAD) jumped over three times to $48.7 billion, or 1.9 per cent of the GDP, in FY18.

The BSE Sensex tumbled over 139 points to finish at 35,599.82. The broader NSE Nifty shed 48.65 points to 10,808.05.

Global markets reeled after the US Fed raised its key interest rate by 0.25 per cent yesterday, the second increase of the year, and signalled two more hikes in 2018 and four in 2019.

The Sensex saw a better start and advanced to a high of 35,749.88, but soon turned lower in line with a weak trend at other Asian markets. It finally finished 139.34 points, or 0.39 per cent, lower at 35,599.82. The gauge had risen by 295.49 points in the past three sessions. Likewise, NSE Nifty dropped by 48.65 points, or 0.45 per cent to 10,808.05 after shuttling between 10,773.55 and 10,833.70.

Foreign portfolio investors sold shares worth a net ~707.7 million, while domestic institutional investors bought equities to the tune of ~4.86 billion on Wednesday, as per provisional data. “WPI rising to a 14month high and a widening CAD, both largely on account of rising crude, also kept sentiments low, but sectoral cues continued to keep markets optimistic, with pharma bucking the trend and rising nearly 2 per cent,” said Anand James, Chief Market Strategist, Geojit Financial Services.

BSE Sensex tumbled over 139 points to finish at 35,599.82. NSE Nifty shed 48.65 points to 10,808.05