Sensex closes 84 points lower, Nifty by 29 as markets respond to US Federal Reserve's rate hike
The strong buying of IT stocks saw the BSE recover from an intra-day low of 200 points.
The Bombay Stock Exchange on Thursday fell 83.77 points lower to close at 26,519.07 and the National Stock Exchange Nifty ended 28.85 points down at 8,153.60 as markets responded negatively to an interest rate hike by the United States Federal Reserve. On Wednesday, the Reserve raised its policy rates by 25 basis points to between 0.50% and 0.75%.
Weaknesses in the pharmaceutical, fast-moving consumer goods and automobile sectors led to stock indices oscillating between overall gains and losses, NDTV reported. Strong buying in information technology stocks saw the BSE recover from an intra-day low of 200 points. Sun Pharmaceuticals was the lop loser on the Nifty, with the company’s stock falling by 4.2%. Other losers included Bharti Airtel, Tata Motors and Yes Bank.
IT stocks were among the top gainers, with Tata Consultancy Services ending 2.22% to close at Rs 2,256.50. Bank of Baroda, ONGC and State Bank of India were also among the top performers of the day. CapitalVia Global Research chief executive officer Rohit Gadia said markets were likely to “take some time to absorb the Federal Reserve’s first interest rate rise this year”, Business Standard reported. “This also will put stress on rupee as the dollar will strengthen,” he said.
Following the announcement of the rate hike, Federal Reserve Chairperson Janet Yellen said Donald Trump’s election had put the central bank under a “cloud of uncertainty”. This is the second rate hike since last December. “The rate increase should be understood as a reflection of the confidence we have in the progress the economy has made,” she said. There are likely to be three more rate hikes in 2017, according to reports.