Headline Indices suffered deep cuts as they opened lower on Wednesday. The BSE Sensex quoted at 59417 points, down 1150 points, while the NSE Nifty 50 was at 17771 points, down 300 points.
The thirty-share index reclaimed the 60,000 mark on Monday, whereas the fifty-share index reclaimed the 18,000 mark on Tuesday. However, the benchmark indices snapped their four-day gaining streak to open deep in the red on Wednesday.
Here are a few factors that contributed to the downfall:
The markets reacted to one of the worst overnight sell-offs in the US markets led by the US inflation print. According to the inflation data from the US, their Consumer Price Inflation for August came in at 8.3 per cent, higher than the 8.1 per cent expectation.
Inflation remained at a multi-decadal high, despite expectations of cooling off after aggressive rate hikes from the US Fed and a sharp drop in oil & gas prices. Analysts expect that the US Fed will now consider a 100 basis point hike instead of a 50 basis point hike in interest rates.
FIIs turned net buyers since July this year. Since then, the markets are on an up move. Benchmark indices have risen significantly from their lows in July and have reclaimed their highs. As a result, investors looking to book profits post the rally could have triggered a fall in the markets.
IT stocks tanked
The IT sector was already facing headwinds from high attrition rates and has not had a great year this far. Bluechip IT stocks like TCS and Infosys witnessed sharp corrections led by interest rate hikes, high inflation and fears of a recession in the US.
The Nifty IT index plummeted 3.5 per cent on Wednesday’s early trades and it has already corrected more than 20 per cent this year. IT stocks have more than a 10 per cent weightage in the Nifty 50 and they contributed to the drag.
Written by Simran Bafna
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