For The Third Session In A Row, The Sensex And Nifty Close Lower

Benchmark market indices fell for the third straight session on Tuesday, as traders braced for aggressive hikes from the Federal Reserve, with the biggest interest rate hike since 1994 already baked into wagers, and as traders braced for aggressive hikes from the Federal Reserve.

After plummeting in the previous two sessions, Indian stock markets had another poor start on Tuesday. Fears of a coming recession pushed Wall Street to a bear market milestone.

Fears of increasing interest rates causing a US recession pushed the S&P 500 down more than 20% from its most recent record closing high, indicating a bear market.

During Tuesday’s session, the 30-share BSE Sensex and the broader NSE Nifty both turned green.

However, data revealed that wholesale-based inflation remained in double digits for the 14th month in a row, sending Indian markets lower on expectations that the Reserve Bank of India will have to order more interest rate hikes to combat increasing price pressures.

The Sensex dropped 153.13 points to 52,693.57, and the Nifty dropped almost 30 points to 15,741.95.

The top laggards in the Sensex pack were IndusInd Bank, Tech Mahindra, Reliance Industries, Maruti, Hindustan Unilever, HDFC Bank, and Asian Paints.

NTPC, UltraTech Cement, Bharti Airtel, and M&M, on the other side, were among the gainers.

Since Russia’s invasion of Ukraine in February, a jump in crude oil and commodity prices has fueled inflation in several countries, prompting central banks to pursue aggressive monetary policies.

The latest selloff in global markets was sparked on Friday by US data showing annual inflation rose by 8.6% in May, the sharpest rate in over four decades.

After numerous investment banks, including Goldman Sachs, signalled the potential of a 75 basis point hike, which was almost fully priced in for Wednesday and would be the largest increase since 1994, global stocks, crypto, junk-rated bonds, and emerging markets tumbled.

Traders have also increased their wagers on how high-interest rates will rise, forecasting a peak of roughly 4% next year versus the previous forecast of 3%, and this repricing has hammered risk assets.

In recent days, the safe-haven dollar has experienced a renewed stampede, reaching new 20-year highs against a basket of currencies.

“Commodities prices are set on the global market, and prices are rising for countries close and far. Cost-push inflation is not transitory anymore,” noted Agnès Belaisch, chief European strategist at the Barings Investment Institute.