Indian equity benchmarks Sensex and Nifty ended lower for the second session in a row and the rupee ended on a flat note on Monday as participants cautiously await US Federal Reserve’s policy decision.
The BSE Sensex fell 84.88 points or 0.15 per cent to settle at 56,975.99 after recovering some lost ground during the fag-end of trade. During the day, it tanked 648.25 points or 1.13 per cent to 56,412.62. The NSE Nifty dropped 33.45 points or 0.20 per cent to close at 17,069.10.
On the Sensex chart, Titan, Wipro, Tech Mahindra, Infosys, Maruti, Asian Paints, Larsen & Toubro and SBI were among the major laggards. In contrast, IndusInd Bank, NTPC, Power Grid, Tata Steel, HDFC and ITC were among the gainers.
“The recent hawkish turn by Fed has made investors extra cautious ahead of the upcoming Fed meeting triggering high volatility in the market. The rising dollar index, FII selling spree and elevated commodity prices further hammered the risk sentiment. On the other hand, domestic numbers like GST collection, auto sales numbers and Manufacturing PMI for the month of April gave a sense of an improving economic outlook,” said Vinod Nair, Head of Research at Geojit Financial Services.
Equity markets will remain closed on Tuesday for Eid-Ul-Fitr.
Foreign institutional investors offloaded shares worth a net Rs 3,648.30 crore on Friday, after they turned net buyers on Thursday, according to stock exchange data.
Asian and European stock markets:
Elsewhere in Asia, bourses were mixed. Seoul and Tokyo settled lower, while Shanghai and Hong Kong were closed for holidays. European markets were also trading lower in early deals.
Analysts and market participants are expecting the US Fed to raise rates by 50 bps when it meets on Tuesday and Wednesday. However, the uncertainty is still there on how hawkish the Fed will sound in comments post decision.
Markets are pricing in an aggressive rate hike from the Fed as it will try to rein in inflation.
Global crude oil prices:
Meanwhile, international oil benchmark Brent crude dropped 2.61 per cent to USD 104.3 per barrel.
Bullion prices:
Gold prices slipped 1 percent toward 2-1/2-month lows on Monday as investors braced for a large interest rate hike by the US Federal Reserve, as it seeks to contain soaring inflation, denting the zero-yield bullion’s appeal.
Spot gold fell 0.9 percent to USD 1,880 per ounce, hovering near last week’s low of USD 1,871.81 an ounce. US gold futures dropped 1.6 percent to USD 1,880.70.
In India, spot gold of 24 carat purity was quoted at Rs 51,410 per ten grams and 22 carat at Rs 47,090 per ten grams. Silver was sold at Rs 62,820 per kg, according to the prices published by IBJA.
Indian rupee flat:
The rupee pared initial gains to settle almost flat against the US dollar on Monday as subdued domestic equities offset the impact of a sharp decline in global crude oil prices.
A strengthening American currency overseas and continuous foreign fund outflows also weighed on the domestic unit, forex traders said.
At the interbank foreign exchange market, the rupee opened slightly higher at 76.48 against the American dollar and gained further ground to trade at 76.35. It oscillated between a high of 76.35 and a low of 76.51 during the session.
US dollar surges again:
The dollar rose back towards a 20-year high on Monday as the euro struggled around the USD 1.05 mark, with investors preparing for a busy week of central bank meetings including a likely Federal Reserve interest rate hike.
The euro also came under pressure after a survey showed that euro zone manufacturing output growth stalled last month as factories struggled to source raw materials, while demand took a knock from steep price increases.
All eyes on Fed policy meet:
The US central bank’s Federal Open Market Committee is scheduled to begin its two-day meeting on May 3 and announce its decision the next day.
US policymakers look set to deliver a series of aggressive rate hikes at least until the summer to deal with rapid inflation and surging labour costs, even as two reports released on Friday showed tentative signs that both may be cresting. A rate hike of 50 basis points on Wednesday evening is widely expected and should come as no surprise.
