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Mumbai: Indian markets were caught in a global selloff on Wednesday as hardening crude oil prices and supply chain bottlenecks stoked fears of rising inflation crimping economic recovery around the world.
A depreciating rupee, which plunged 54 paise against the US dollar, added to the woes.
Snapping its two-day winning run, the 30-share BSE Sensex slumped 555.15 points or 0.93 per cent to close at 59,189.73.
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IndusInd Bank, which had topped the Sensex gainers chart in the previous session, was the biggest laggard on Wednesday, shedding 3.38 per cent.
Tata Steel, Bajaj Auto, Sun Pharma, HCL Tech, Reliance Industries and Titan were among the other major losers.
Only three counters managed to close in the green — HDFC twins and Bajaj Finance, advancing up to 1.24 per cent.
“Weak global markets, which resulted in profit booking in metals and IT stocks, led domestic indices to trade in red, trimming its early gains. Spike in crude prices is spooking the Indian market while inflation is affecting US bond yields.
“RBI commenced its three-day MPC meeting in which the central bank is expected to keep rates unchanged, however, it is likely to announce measures to gradually pump out liquidity from the economy,” said Vinod Nair, Head of Research at Geojit Financial Services.
S Hariharan, Head- Sales Trading, Emkay Global Financial Services, said the global backdrop is worrisome with surging energy prices, slowing demand conditions and a global supply chain crunch across basic materials.
“Should global central banks respond to rising inflation expectations by paring bond purchases and tightening monetary conditions, that could act as a trigger for sudden re-pricing of risk assets across the board,” he added.
All sectoral indices ended in the red, with BSE metal, healthcare, consumer durables, industrials and basic materials skidding up to 2.98 per cent.
Broader BSE midcap and smallcap indices lost as much as 1.22 per cent.
World stocks reeled after soaring oil prices fuelled inflation concerns amid supply chain issues and labour shortages.
Elsewhere in Asia, bourses in Hong Kong, Seoul and Tokyo ended with significant losses. Shanghai was closed for holidays.
Equities in Europe were also trading deep in the red in the afternoon session.
International oil benchmark Brent crude surged 1.14 per cent to USD 82.19 per barrel.
The rupee tumbled 54 paise to close at 74.98 against the US dollar on Wednesday as a stronger greenback against key rivals weighed on investor sentiment.
Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,915.08 crore, as per exchange data.On the macroeconomic front, international ratings agency Moody’s on Tuesday upgraded India”s rating outlook to ”stable” from ”negative”, saying a recovery is underway in the Asia”s third-largest economy and growth this fiscal will surpass the pre-pandemic rate. Moody’s Investors Service however kept India’s sovereign rating at ”Baa3” — which is the lowest investment grade, just a notch above junk status.