Equity benchmark indices opened on a negative note on Thursday with the Nifty50 slipping below the 16,000 and the 30-share Sensex falling more than 600 points amid weak global cues. This is the fifth session when indices continued their downtrend.
At 09:16 AM, Nifty was down 169 points (1.05%) to trade at 15997 while Sensex was down 589 points (1.09%) to trade at 53499. The indices weakened further as the Nifty was down by more than 250 points to slip below 15,900. Sensex declined over 850 points to trade below 53,200.
From the Sensex firms, UltraTech Cement, Tata Steel, Bajaj Finance, M&M, IndusInd Bank, HDFC Bank, Bajaj Finserv and Larsen & Toubro were among the major laggards. In contrast, Power Grid emerged as the only gainer.
Meanwhile, Rupee declined 30 paise to 77.55 against US dollar in early trade, according to news agency PTI. Global oil benchmark Brent crude futures declined 1.11 per cent to USD 106.32 per barrel.
A lacklustre trend in the domestic equity markets and a firm American currency weighed on investor sentiment. Besides, persistent foreign fund outflows and elevated crude oil prices impacted the domestic unit.
In the previous trade, the BSE Sensex ended at 54,088.39, lower by 276.46 points or 0.51 per cent. The NSE Nifty dipped 72.95 points or 0.45 per cent to settle at 16,167.10. Foreign institutional investors remained net sellers in the capital market as they offloaded shares worth Rs 3,609.35 crore, as per stock exchange data.
"Indian markets are seeing turbulent swings as investors continue to be concerned about rising interest rates, fears about slowing economic growth, and additional tightening measures in China," said Mohit Nigam, Head - PMS, Hem Securities.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, inflation continues to be a major headwind for markets.
"Even though domestic institutional investors (DII) buying is more than foreign institutional investors (FII) selling now, that is not enough to lift sentiments in the market since the macro headwinds are strong," Vijayakumar said.
RBI may up inflation forecast
The Reserve Bank of India is likely to raise inflation projections in the Monetary Policy Committee (MPC) meeting next month and would also consider a rate hike to tame inflation which is above its comfort level. The MPC, headed by the RBI Governor, is scheduled to meet between June 6 and June 8. It has been mandated to keep retail inflation in the range of 2-6 per cent.
Tightening of policy rates by major central banks, including the RBI, are likely to adversely impact demand in the next 6-8 months and slow down the recovery process.
Besides the RBI, several central banks including the US Federal Reserve and Bank of England have hiked their benchmark lending rates to rein in inflation, which has been exacerbated by the Russia-Ukraine conflict.