Stocks extended their slide for a fifth straight session on Monday, with the benchmark S&P BSE Sensex tumbling 1,545.67 points, or 2.6%, as growing concern about the pace of anticipated interest rate increases by the U.S. Federal Reserve spurred overseas investors to unwind positions in the Indian equities market.
Metal and IT stocks led the sell-off with top Sensex losers including Tata Steel (5.98%), Wipro (5.35%) and Tech Mahindra (5.14%). Reliance Industries fell 4.1%.
“Sell-off in global markets, weak Q3 results and pre-budget nervousness triggered heavy sell-off in the domestic bourses as risk sentiment took a blow ahead of the Federal Open Market Committee (FOMC) meeting starting tomorrow,” said Vinod Nair, Head of Research at Geojit Financial Services. “Investors are keenly awaiting the result of the two-day Fed meeting where the U.S. central bank is expected to provide more guidance on its rate hike plans. While all sectors hit rough weather, stocks of the new age tech companies were the most affected due to drop in growth of profitability amid expensive valuations,” he added.
‘More volatility ahead’
The NSE Nifty-50 index too slumped 468.05 points, or 2.66%, to 17,149.10 points and analysts warned of more volatility ahead.
“The index went on to even test the 17,000 mark which was last seen during the end of December,” said Ruchit Jain, Lead Research Analyst at 5paisa.com. “As the global markets tumbled, FIIs were seen selling in the cash segment as well as in the index futures segment which has resulted in a sell-off in our indices,” he added.
The INDIA VIX, which measures the implied volatility, had also risen sharply to near the 23 mark, Mr. Jain observed. “Although this is not an alarming level as of now, it certainly is a sign of higher short-term volatility ahead of the global and domestic events,” he added.