Indian shares fell on Monday, dragged by I.T. stocks, with the benchmark Nifty slipping below a key long-term average for the first time in over four months after U.S. data reinforced fears of a prolonged high-interest rate regime.
The Nifty 50 index fell 0.84% to 17,320.50, while the S&P BSE Sensex edged 0.76% lower to 59,013.02 as of 10:46 a.m. IST.
The 50-share NSE index fell below the 200-day moving average of 17,376.21 for the first time since early October.
Nine of the 13 sectoral indexes declined, led by a 2.5% drop in high-weightage information technology with all of its 10 constituents in the red.
The drop in the IT sector, which earns a significant share of its revenue from the United States, comes as Wall Street slid after data showed the personal consumption expenditures price index, the U.S. Federal Reserve’s preferred inflation measure, accelerated in January.
“Better-than-expected economic data coming out of the U.S. and U.K indicate that instead of one more hike there will be two or three more hikes,” said Gaurav Dua, senior vice-president and head of capital market strategy at Sharekhan.
Fed futures now have rates peaking around 5.42%, suggesting at least three more hikes from the current 4.50-4.75% band.
Meanwhile, prospects of another Bank of England interest rate hike in March rose after last week’s buoyant Composite Purchasing Managers Index data in February.
The withdrawal of liquidity due to sustained foreign fund outflows has added to the pressure on domestic markets, analysts added.
Foreign portfolio investors sold 311.65 billion rupees ($3.76 billion) of Indian equities thus far in the year, according to official data.
Among individual stocks, Bajaj Auto fell as much as 4.3% – the top loser in Nifty 50 – after a report said that the company could take a steep cut in production of motorcycles and three-wheelers across its export-focused plants in March due to uncertainties in its top market, Nigeria.
(Except for the headline, this story has not been edited by String Reveals staff and is published from a syndicated feed.)
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