Minutes from FOMC meet spook investors: Stocks plunge ahead of RBI policy decision

The equity benchmarks fell for the third straight session on Thursday tracking weak global markets, as minutes from the Federal Open Market Committee (FOMC) meeting weighed on investor sentiment. Markets will take cues from the Reserve Bank of India’s monetary policy decision on Friday – the expectation is that the central bank is likely to maintain its accommodative stance.

The Sensex fell 575.46 points or 0.97% to end at 59,034.95, with 18 out of the 30 constituents ending in the red. The Nifty-50 settled lower by 168.10 points or 0.94% at 17,639.55. The Nifty-50 has declined over 2% in the last three trading sessions, registering its longest losing streak in nearly two weeks. RIL, HDFC Bank and HDFC contributed the most to the index’s fall.

Currently, the markets are led by non-institutional players who have begun to aggressively take profits in the face of balance sheet reduction by the US Fed and ahead of the RBI policy meet. The Nifty should now take support from the 17,442-17,519 band. Friday’s MPC meet may not bring in any positive surprise and hence there seems to be little build-up ahead of it, ”said Deepak Jasani, head of retail research, HDFC Securities.

Elsewhere in Asia, markets ended broadly lower tracking the overnight sell-off in other global markets. China’s Shanghai Composite ended lower by 1.42%, Japan’s Nikkei 225 by 1.69%, and Hong Kong’s Hang Seng ended down by 1.23%. “Global markets were trading lower after the Fed released minutes from its last meeting reinforcing its hawkish views of aggressive monetary policy tightening to curb inflation,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.

Back home, except for the Nifty pharma and realty, other sectors witnessed selling pressure, with Nifty metal and IT being the worst performers, falling 1.7% and 1.2%, respectively. Overall, out of the 3,514 stocks traded on the BSE, 1,786 stocks declined.

Foreign portfolio investors, however, turned sellers after a week-long streak of buying. FPIs sold shares worth Rs 5,009.62 crore on Thursday, while local institutional investors bought shares worth Rs 1,774.70 crore, provisional data from the exchanges showed.

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