The domestic benchmark indices have suffered significant losses as a result of severe losses in US markets overnight and Asian stocks this morning. The BSE Sensex dropped more than 1,000 points to 54,668, while the NSE Nifty dropped 316 points to 16,366. The BSE market capitalization fell Rs 4.8 lakh crore to Rs 254.83 lakh crore, down from Rs 259.64 lakh crore the day before. On the bourse, over 2,320 equities were down, 447 were up, and 76 were unchanged.
Despite some improvement, the midcap and small-cap indices were still down by as much as 2%. The Sensex and Nifty50 indexes lost little over 1%, surpassing Asian peers by up to 4%.
Swastika Investmart Ltd. Managing Director Sunil Nyati stated that, due to entrenched inflation and the possibility of harsh measures by central banks to tame it, stock markets around the world have become extremely fragile. Other factors such as geopolitical tensions, stagflation risk, and a slowing global economy have also frightened Indian investors, resulting in a sharp drop in the Sensex and Nifty.
The Main Causes Of The Market Fall On Friday
Central Bank Policy Rate Hikes and Inflation Forecasts
The Bank of England raised interest rates by a quarter basis point on Thursday, warning that the UK economy could contract in 2023 and forecasting inflation of 10% or higher.
The US Federal Reserve had raised its policy rate by 50 basis points the day before, the largest increase in 22 years, despite the fact that the US economy fell by 1.4 percent in the March quarter. The Reserve Bank of India (RBI) hiked the policy rate by 40 basis points, as well as the cash reserve ratio.
FPI Out Flows
For the ninth month in a row, foreign investors have been net sellers of domestic stocks. This is despite the fact that monthly outflows have dropped from a high of Rs 41,123 crore in March.
The dollar is rising as interest rates in the United States rise. Risky assets, such as developing market equities, have an inverse connection with the US dollar. According to data, the institutional sector was a net seller of Rs 4,857 crore in May.
Oil Prices
Oil prices held steady on Thursday, despite a stronger dollar and a decrease in global stock markets, and supply concerns after the European Union (EU) announced further measures against Russia, including a crude embargo. By 1:54 p.m. EDT, Brent futures had risen 42 cents, or 0.4 percent, to $110.56 a barrel. WTI crude in the United States gained 3 cents to $107.84.
