Domestic market retreats from record high as interest rate hike fear looms
Investors are now worried that the Federal Reserve will increase interest rates later this month and keep them at elevated levels to bring down consumer inflation.
NEW DELHI: After hitting successive highs in the last two weeks, India’s equity market closed with a noticeable cut on Friday amidst negative global cues. India and other Asian markets fell on Friday after Wall Street retreated on Thursday following a rise in the US job data which stoked fresh fears of a prolonged interest hike regime. Sensex on Friday hit its fresh record high of 65,898.98 during the early trading hour but closed with a loss of 505 points at 65,280.45 while the Nifty fell 166 points to close at 19,331.80.
Investors are now worried that the Federal Reserve will increase interest rates later this month and keep them at elevated levels to bring down consumer inflation. This has resulted in increased demand for US bond yields and made equities unattractive.
Vinod Nair, head of research at Geojit Financial Services, said, “The domestic market succumbed to profit-booking as heat waves from weak global markets hit the shore. Global equities declined due to a spike in US bond yields, fuelled by expectations of a prolonged high-interest rate environment following a sharp increase in US private payroll data. Investors are eagerly awaiting the release of key US non-farm payroll and unemployment data today, which will provide further clues on the Fed’s policy direction ahead of its July meeting.”
In the Sensex, Tata Motors (up 2.94%) and Titan (up 1.26%) were top gainers while Power Grid, IndusInd Bank, Hindustan Unilever and NTPC were the top laggards, each falling over 2%.
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