Sensex drops over 1,400 points, Nifty at 15,774 points

In the run-up to domestic inflation statistics, investor confidence was roiled as fears of aggressive policy tightening by the US Federal Reserve roiled the stock market and the rupee hit an all-time low.

The NSE Nifty 50 index lost 2.6 percent to 15,774.4 points, its lowest level since July 2021, while the BSE index fell 2.7 percent to 52,846.7 points, its lowest level since July 2021.

The focus was on inflation figures that would be released later in the day. According to a Reuters survey, the consumer price index likely fell slightly in May, but remained considerably above the Reserve Bank of India’s upper tolerance limit for the fifth month in a row.

“The Indian market’s valuations continue to be uninspiring, especially of consumption sectors and ‘quality’ stocks,” said Shrikant Chouhan, head of equity research (retail) at Kotak Securities.

“Financials are still one of the few sectors with decent values, but they, too, would struggle if India’s macroeconomic situation worsens.”

Global counterparts were also weaker on concerns that the Fed might tighten policy more aggressively in the wake of data released last week showing that the US consumer price index hit its highest level in over 40 years last month.

The rupee fell to a three-year low of 78.28 against the dollar due to a strong dollar, while the benchmark 10-year bond yield jumped to a more than three-year high of 7.60 percent as investors unloaded emerging market assets.

Information technology companies on the Nifty fell 4.1 percent in Mumbai trading, leading sectoral losses. Infosys Ltd and Tata Consultancy Services, both sector heavyweights, lost 3.5 percent and 4.2 percent, respectively.

The largest losers on the NSE were Bajaj Finserv and Bajaj Finance, which fell nearly 7% and 5%, respectively. The NSE bank index dropped 3.1%.