Sensex, Nifty slump 1% each on banking stocks

Rate hike fears keep markets on the edge

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Benchmark stock indices slumped by 1% on Friday led by losses in banking stocks and fears of a further rate hike in the U.S.

The S&B BSE Sensex fell 671.15 points, or 1.12%, to 59,135.13 points. Sensex stocks which lost most include HDFC Bank (2.63%), HDFC (2.27%), State Bank (2.12%), IndusInd Bank (2.06%) and Axis Bank (1.89%). The NSE Nifty-50 index too fell 176.70 points or 1% to 17,412.90 points.

Amol Athawale, Deputy Vice-President, Technical Research, Kotak Securities Ltd., said, “Markets crumbled for the second straight session as weak global cues triggered selling across the board with banking stocks taking the maximum pounding.”

“The sentiment has been bruised by the recent U.S. Fed statement that more rate hike is on the cards to keep inflation under control, which could fuel recession fears going ahead,” he said.

Vinod Nair, Head of Research, Geojit Financial Services said, “The global market’s cautious attitude towards the probability of a sharper rate hike was exacerbated by further negative signs from the U.S. market. Selling intensified as the market awaited the release of U.S. unemployment and non-farm payroll data, which will have a significant impact on the upcoming Fed meeting.” 

“However, higher-than-expected jobless claims in the U.S. that came in on Thursday helped alleviate some concerns about the Fed becoming stricter,” he added.