Express press service
MUMBAI: Indian investors fell nearly Rs 7 lakh crore poorer on Monday, with the Nifty Barometer closing at its lowest level in 11 months, rocked by fears of a more aggressive U.S. Fed rate hike after prices retail prices in May rose 8.6% against the market expectation of 8.3%.
The Nifty closed a whopping 427 points or 2.64% at 15,774.40 and the Sensex a whopping 1,457 points or 2.68% at 52,846.70, led by IT, Banks, Financials and metals. Index heavyweights that dragged Nifty down included twins Bajaj, IndusInd, TechM and ICICI Bank, which fell 4.5-7%. Nestle India and Bajaj Auto were the only two Nifty 50 stocks that ended in the green.
The Vix Fear Gauge closed a gigantic 14.25% at 22.37, signaling heightened uncertainty ahead of the outcome of the June 15 FOMC meeting. A reading above 20 is negative. Negative sentiment spread to other assets, with the yield on the benchmark 10-year government paper hitting an over-three-year high of 7.6% and the rupiah closing at an all-time low of 78, 03 for a dollar.
The sale of FII was behind the fall of the rupee. FII sold a provisional value of Rs 4,164 crore of shares on Monday, taking its aggregate sales this timeframe to Rs 1.88 lakh crore. Their sales should continue. Major support on Nifty starts at 15,500 and resistance at 16,000. Equity Research (Retail) at Kotak Securities.
“In such a situation, the index would fall to the level of 15,500-15,400 in the short term. It is advisable to reduce a weak long position below the 15700 level. In addition, Bank Nifty could drop to the 32,000 level if it closes below 33,500.” The Dow Jones was trading down 2.25% at the time of writing as the SGX Nifty traded down 56 points to 15718. The market may test its March low at 15671, before falling lower in the coming days.
“The risk aversion mode in equities globally after the US inflation print has raised fears of an aggressive rate hike and the dollar index at 104 appears to weigh heavily amid relentless FII selling despite the local redemptions in May at a two-year low,” said S Ranganathan, head of research at LKP Securities.