Fears of US Fed rate hike shook Indian stock markets, Sensex fell, rupee at fresh low

Author: Nishu June 14, 2022

The rupee fell by 14 paise to 76.05 against the US dollar in early trade

The Indian rupee came under unprecedented pressure and fell to a new all-time low against the US dollar, crossing the 78 level, closing 11 paise lower at 78.04 for the first time.

The Indian rupee came under unprecedented pressure and fell to a new all-time low against the US dollar, crossing the 78 level, closing 11 paise lower at 78.04 for the first time.

Benchmark equity indices crashed over 2.6% on Monday and the rupee fell to a new low against the US dollar as the US Federal Reserve pushed to curb galloping inflation in that country.

Led by finance and technology stocks, the S&P BSE Sensex fell 1,457 points or 2.68% to 52,846.70. Top losers included Bajaj Finserv (7.02%), Bajaj Finance (5.44%), IndusInd Bank (5.27%), Tech Mahindra (4.845), ICICI Bank (4.46%) and TCS (4.31%).

The NSE Nifty-50 index also closed at 15,774.40, down 427 points or 2.64%.

“Hotter-than-expected inflation data in the US last week has upset the markets” [about the] US Fed Policy Meeting [in the] This week,” Narendra Solanki, Head, Equity Research (Fundamentals) Anand Rathi Shares & Stock Brokers. “After high inflation, markets are panicking” [that the] The US Fed may take unexpected policy measures to control inflation which could impact overall economic health,” he said.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Inflation scare has weakened the markets globally. It is important to appreciate the fact that globally markets are highly integrated. Mother Market, US, sets the trend and others follow. ,

“US markets are weak on worse-than-expected inflation (8.6% versus 8.3% in May) and markets expect aggressive monetary tightening by the Fed. This is counterproductive to riskier assets like equities. US dollar and bond yields rise. This will force foreign portfolio investors (FPIs) in India to sell more.

Due to continued and more aggressive selling by FPIs, the Indian rupee came under unprecedented pressure and hit a new all-time low against the US dollar, crossing the 78 level, closing 11 paise lower at 78.04 for the first time.

“The Indian rupee fell to its all-time low against the US dollar today, mainly due to a brutal sell-off in domestic equities, which accelerated sharply to a 41-year high in May in US inflation, which left market participants nervous. did.” Sugandha Sachdeva, Vice President, Commodities and Currency Research, Religare Broking Limited said.

“With this fall, the rupee has crossed the crucial 78 mark which had been providing a strong cushion to the domestic currency for the past several weeks. The outlook on the rupee is negative in the near term, given concerns about an aggressive rate hike campaign by the US Fed and a move towards a four-week high in the US dollar. For a near term outlook, 78.50 points is likely to provide support to the local unit,” she said.

Analysts said they believe that the equity market will remain volatile in the near future.

14 June, 2022, 1:07 pm

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Tuesday, 14th June 2022

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