Equities track global cues, dive for third day

The Nifty 50 ended 1.01% lower and the Sensex fell 1.06% in Thursday’s trade

MUMBAI: Indian stocks continued to slide for the third straight day on Thursday, registering their worst weekly performance in over a month, as rising crude prices and fears of a US interest rate hike weighed on investor sentiment.

On Thursday, the benchmark indices Sensex and Nifty slid 1.06% and 1.01% to hit 59,464.62 and 17,757, respectively.

The Sensex is down 2.87% so far this week, while the Nifty is down 2.73%, their worst weekly performance since the week of 13 December, when both indices witnessed a correction of 3%. The three-day downward streak has erased investor wealth by ₹6.8 trillion.

“Domestic equities closed lower following weak global indications due to the possibility of Fed raising interest rates in the near term. Nifty fell ~1% while the broader markets outperformed the main indices, with the Nifty Midcap and Smallcap declining 0.14% and 0.06%, respectively. Most sectoral indices ended lower except Nifty Metal (+0.57%) and Nifty Realty (+0.28%). Nifty Pharma declined the most at 1.7%, followed by Nifty IT (-1.7%) and Nifty FMCG (-1.2%),” said Mitul Shah, head of research, Reliance Securities.

“US equities ended sharply lower after a diverse set of corporate earnings, the market continued to worry about higher US Treasury yields and the Fed tightening monetary policy. The Dow Jones fell 0.96%, the S&P 500 lost 0.97%, while the Nasdaq dropped 1.15%. The 10-year Treasury yield hit a high of 1.9%. Investors are looking to next week’s Fed policy meeting for more clarity on central bankers’ plans to rein in inflation. Data last week showed US consumer prices increased solidly in December,” Shah added.

The concerns over rising inflation, bond yields and Fed’s moves have also prompted foreign institutional investors to pull money out of markets such as India.

“Persistent concern over global inflation and a likely Fed rate hike acted as major headwinds for the domestic market to tumble for the third day. High volatility due to rising bond yields is pressuring foreign investors to pull out. As the recent earnings failed to excite the market, the on-going global volatility drained investor confidence,” said Vinod Nair, head of research, Geojit Financial Services.

FIIS have sold Indian equities worth $651.1 million or ₹4,831.25 crore net so far in January, while domestic institutional investors have bought equities worth ₹6,391.73 crore so far, data from Bloomberg shows.

Brent crude prices have hit a seven-year high after a drone attack on oil tankers of the Abu Dhabi National Oil Co (Adnoc) on Monday, stoking inflation concerns. Brent crude climbed to $88.02 a barrel on Thursday, an increase of 0.41%.

Experts expect volatility to continue in the run-up to the budget and several state polls.