Markets fall for a 3rd day as Fed keeps 2023 hike in play

Mumbai: Indian equities extended losses to the third straight day on Thursday, mirroring the weakness in global markets, after the US Federal Reserve indicated the likelihood of one more interest rate increase this year. Bank and automobile shares led the downsides as foreign funds dumped stocks worth ₹3,007 crore amid heightened risk-off sentiment.

NSE's Nifty fell 159.05 points or 0.8% to close at 19,742.35. BSE's Sensex declined 570.60 points or 0.85% to end at 66,230.24. Both indices have dropped close to 2.4% in the past three trading sessions after hitting record highs last week.

Elsewhere in Asia, markets dropped on Thursday tracking the overnight fall on Wall Street as the Fed's commentary after its rate-setting meeting on Wednesday was perceived to be more hawkish than expected. While the US central bank kept interest rates unchanged, Fed Chairperson Jerome Powell's remarks indicating the likelihood of a hard landing made investors nervous.


China sank 0.8%, Hong Kong fell 1.3%, South Korea declined 1.8% and Taiwan dropped 1.3% on Thursday. The pan-Europe index Stoxx 600 was down 1.3% at the time of going to print on Thursday.

"Markets anticipated the Fed to not hike rates but there is expectation of a hike towards the end of the year," said Jayesh Bhanushali, lead-research at IIFL Securities. "This has led to profit booking in the markets." He does not expect the fall to continue for too long and recommends a 'buy on dips' investment strategy. "Since markets rallied a lot, the selling was anticipated, but the markets won't tank big time," said Bhanushali. "A correction of 300-400 points (in the Nifty) followed by a rally is expected."

Among blue chips, M&M, SBI, ICICI Bank and IndusInd Bank fell between 2% and 3% on Thursday.