Equity benchmark indices took a nosedive in early trading on Wednesday, with the Sensex plummeting over 675 points, echoing negative sentiments prevailing in the global market. This decline follows higher-than-expected inflation figures in the US, which have rattled investor confidence.
The Nifty 50, a broader index, witnessed a significant drop of 187.85 points or 0.86 per cent, settling at 21,555.40 points, while the Sensex, comprising 30 blue-chip companies, crashed 675.79 points, or 0.94 per cent, reaching 70,879.40 points.
The recent inflation data from the US has disrupted expectations regarding the Federal Reserve's potential interest rate adjustments. This unexpected surge in inflation has caused a stir in financial markets, impacting investor outlooks on the timing and extent of potential interest rate cuts.
In the Sensex index, 27 stocks recorded declines, with major losers including Infosys, Tech Mahindra, Wipro, HDFC Bank, and TCS. Similarly, 44 stocks in the Nifty pack traded in the red.
Deepak Jasani, Head of Retail Research at HDFC Securities, commented on the situation, stating, "January's hotter-than-expected US inflation report threw the financial market into a tailspin on Tuesday and upended investors' expectations about how soon and by how much the Federal Reserve might start cutting interest rates."
In the US, the consumer price index rose 0.3 per cent in January, while the core rate, excluding volatile food and energy costs, rose 0.4 per cent, slightly exceeding Wall Street's expectations.
Asian markets showed mixed trends on Wednesday, with Japan's Nikkei 225 and Hong Kong's Hang Seng indices experiencing declines, while China's SSE Composite Index registered a gain of over 1 per cent. On Tuesday, both US and European stocks closed lower.
Jasani further explained, "Asian stocks tracked a drop on Wall Street following hotter-than-expected US inflation data, while a slump in the yen past 150 per dollar triggered a warning from Japan."
On Tuesday, the BSE Sensex surged 482.70 points to close at 71,555.19 points, while the NSE Nifty gained 127.20 points to conclude the day at 21,743.25 points. Foreign Portfolio Investors (FPIs) were net buyers on Tuesday, purchasing shares worth Rs 376.32 crore, as per data available with BSE.
(With PTI inputs)
