Global recession fears casting shadow over markets

Mumbai: Equity benchmarks spiralled lower for the fourth session running on Monday, in tandem with a bearish trend overseas as hardening interest rates and prospects of a global recession darkened the outlook for riskier assets. The rupee plunged to a fresh lifetime low against the US dollar amid foreign fund outflows, which further dented investor sentiment.

The 30-share BSE Sensex tanked 953.70 points or 1.64 per cent to close at 57,145.22. Similarly, the broader NSE Nifty fell 311.05 points or 1.80 per cent to 17,016.30.

Maruti Suzuki was the top laggard in the Sensex pack, shedding 5.49 per cent, followed by Tata Steel, ITC, Axis Bank, NTPC, Bajaj Finance and IndusInd Bank. In contrast, HCL Technologies, Asian Paints, Infosys, UltraTech Cement, TCS, Nestle India and Wipro were the gainers, climbing up to 1.28 per cent.

"Nifty fell for the fourth consecutive session driven by weak global cues and a falling rupee. Global risk assets including equities extended their selloff on Monday as fears of faster inflation and global recession continued to rise," said Deepak Jasani, head (retail research), HDFC Securities.

Vinod Nair, head (research) at Geojit Financial Services, adds: "The soaring dollar as a result of aggressive monetary tightening by the US Fed, slowing economic growth and rising demand from cautious investors are causing turbulence in the global equity markets. This is creating mayhem in the domestic market led by weakening INR, elevated bond yields and pessimistic trends of Asian peers. Only the IT sector, which exhibited the weakest performance in the last 1 year, defied the trend in anticipation that the global recession is mostly factored in the price and is trading at reasonable valuations."

Foreign institutional investors (FIIs) offloaded shares worth a net Rs 2,899.68 crore on Friday, according to data available with BSE.

In the broader market, the BSE smallcap gauge tumbled 3.33 per cent and the midcap index fell by 2.84 per cent. All the BSE sectoral indices, except IT ended lower, with realty falling 4.29 per cent, auto (3.86 per cent), utilities (3.72 per cent), power (3.71 per cent), commodities (3.32 per cent), energy (3.17 per cent), oil & gas (3.10 per cent) and telecommunication (2.97 per cent). A total of 2,925 firms declined, while 660 advanced and 122 remained unchanged. Elsewhere in Asia, markets in Seoul, Tokyo, Shanghai and Hong Kong ended sharply lower. European bourses were trading in the red in mid-session deals. The US markets ended in the negative territory on Friday. Meanwhile, the international oil benchmark Brent crude slipped 0.75 per cent to USD 85.50 per barrel. The rupee plunged 58 paise to close at an all-time low of 81.67 (provisional) against the US dollar on Monday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit.