Markets began their week on a low as the Bombay Stock Exchange Sensex fell by nearly 550 points and the National Stock Exchange Nifty by 170 points on Monday. The fall was largely attributed to hints that the United States Federal Reserve could hike its interest rates as early as next week. The selloff by traders is the biggest since Britain voted to quit the European Union on June 24, according to the news channel. The rupee also fell by 25 paise to Rs 66.93 to the dollar.
Banking stocks faced immense pressure, with Yes Bank falling by 4%. Shares of Axis Bank and Bank of Baroda were also trading 3%-4% lower, according to NDTV. Asia-Pacific markets also saw losses with Japan’s Nikkei 225 falling by 1.5% and Hong Kong’s Hang Seng by 2.4%, according to AP. China’s Shanghai Stock Exchange and Australia’s S&P/ASX 200 sank by 1.5% and 2.3% respectively.
IIFL Holdings Limited Executive Vice President Sanjeev Bhasin said that markets are likely to see sharper corrections as the possibility of a rate hike can continue to affect equities in the short run. A rate hike by the US Federal Reserve will also make markets such as India less attractive to foreign investors, according to the report. On Friday, Boston Federal Reserve President Eric Rosengren said the US central bank would face increasing risks if it did not raise interest rates soon, according to The Economic Times.
The fall in domestic markets comes after the Nifty breached the 8,900-point mark for the first time in 18 months on September 6. The Sensex has also risen sharply in recent weeks, with the index hitting a 52-week high of 28,751.71 during intra-day trading on September 6. Foreign investors have pumped nearly $6 billion (approximately Rs 39,885 crore) into Indian markets this year.
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