Fed worries sink stock markets; Nifty below 20,000 mark but midcaps outperform
- Sensex fell by 796 points to 66,800, and
Niftyslipped by 231 points to 19,901 on Wednesday.
- A correction is due for and valuations are getting expensive after the recent spike, say experts.
- PSU Bank stocks remained under pressure after rallying on Monday.
AdvertisementIndian benchmark indices crashed on Wednesday with both Sensex and Nifty slipping by over 1.1% in trade right ahead of the US Fed meeting that will decide on the central bank’s decision on interest rates. The midcap stocks though, had an easier day with the Nifty Midcap closing only 0.2% in the red.
Sensex fell by 796 points to 66,800, and Nifty slipped by 231 points to 19,901 on Wednesday. Nifty Bank continued to be under pressure and fell by 595 points.
The markets which broke an 11-session rally on Monday with profit booking, saw a lot of investors taking the cautious stance.
“Correction has been due for some time and valuations too were getting expensive after the recent spike, and hence investors resorted to profit-taking ahead of the outcome of the US FOMC meeting on interest rates,” said
Power Grid, Coal India, Asian Paints, ONGC and Sun Pharma were the top gainers in the Nifty50 pack while
Even PSU banking stocks which rallied in the last session were in the red with Indian Overseas Bank and UCO Bank being the top losers on Sensex.
“Bank Nifty underperformed today due to rising cost of funds and reduction in deposits leading to moderation in net yield," said
Experts believe that the market has taken a bearish turn or at least could be an early indication of a bearish reversal. "In the short term, it is probable that the Nifty will decrease toward the 19,700-19,630 range. Selling on rallies might remain a favorable strategy as long as the index remains below the 20,000 mark," said
Stress in the US markets
A decision will be taken by the
“Technically, intense selling saw the Nifty slip below the 20,000 mark, which is largely negative. For the bulls now, 20,000- 20,030 could act as immediate resistance areas while 19,825-19,775 could act as a crucial support zone for the traders,” added Chouhan.
Indian Rupee rose by 6 paise to close at 83.26 per US dollar after it hit an all-time low in the last session. Crude oil prices eased by 0.7% adding to the factor but its rise was capped by sell-off in domestic equity markets and strengthening US dollar.
"The domestic markets remained under pressure due to rising US bond yields and a stronger greenback. Concerns reigned over upcoming Fed policy, interest rate trajectory and rising oil prices,” said Nair.
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