Domestic benchmark indices, Sensex and Nifty, plunged by one percent today amidst heavy selling pressure, triggered by the Bank of Japan’s decision to raise interest rates for the first time in 17 years and cautious sentiment prevailing ahead of the United States Federal Reserve meeting outcome.
The BSE’s Sensex witnessed a sharp decline of 1.01 percent, shedding 736.37 points to close at 72,012.05, while the NSE’s Nifty dropped by 1.08 percent or 238.25 points, concluding the session at 21,817.45.
The Bank of Japan (BOJ) announced on Tuesday its move to increase interest rates for the first time since 2007, marking the end of an eight-year-long negative interest rates regime. The interest rate was lifted to a range of zero to 0.1 percent from the previous (-) 0.1 percent. Vinod Nair, Head of Research at Geojit Financial Services, commented, “Following the BOJ’s decision to hike interest rates for the first time in 17 years, the Asian peers’ mood turned sour, which pulled the Indian market to continue its recent pessimism.”
Analysts noted concerns over premium valuations and delayed rate cuts by the US Fed due to higher-than-expected inflation, evident from the upward trend in the dollar index, as additional factors contributing to the correction in the domestic market.
Investors opted to exit long positions ahead of the US Federal Open Market Committee meeting, chaired by Jerome Powell, which is expected to shed light on the future interest rate scenario. Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., highlighted, “With the sharp fall, Nifty faces resistance at 22,001-22,251 levels and has support in the range of 21,657 to 21,375.”
Sectors across the board witnessed a downward trend, with major sectoral indices such as information technology, media, and pharmaceuticals registering losses exceeding 2.5 percent. Stocks of Bharat Petroleum Corporation Ltd, Tata Consultancy Services, Cipla, Britannia Industries Limited, and IndusInd Bank were among the top decliners on the NSE.
Both the BSE SmallCap and the BSE MidCap indices recorded declines of 1.04 percent and 1.36 percent, respectively.
On the investment front, foreign portfolio investors (FPIs) net bought Rs 1,421.48 crore worth of local shares, while domestic institutional investors purchased equities valued at Rs 7,449.48 crore, as per provisional data from the BSE.
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