NEW DELHI: Bears took full control of Dalal Street as the country’s benchmark equity indices — BSE Sensex and NSE Nifty — fell over 1.5% on Friday. Concerns about rising inflation and the Omicron spooked investors as the Bank of England became the first major central bank to hike key rates.
The Bank of England’s decision to hike interest rates from 0.10% to 0.25% came days after the US Federal Reserve spoke of increasing pace of tapering from $15bn/month to $30bn/month and signalled rate hikes for the next three years.
The Fed may now go for three rate hikes now in 2022 as compared to one hike projected earlier. Most of these steps are taken to control rising inflation which now stands at decade high levels at major economies.
Back at home, the RBI kept all key policy rates on hold at the recently concluded monetary policy meeting and gave no strong signals of any timelines on a possible reverse repo rate hike.
However, the country’s largest public sector bank- SBI- on Friday hiked its base interest rate by 0.10%.
The other major concern for the market is the spread of Omicron as total cases infected with this Covid variant has surpassed the 100-mark.
Shibani Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company, said, “Emergence of a new Covid-19 variant- Omicron, inflation concerns and hawkish turn of global central bankers has led to an increase in volatility in equity markets worldwide including India. With inflation increasing in countries across the world, all eyes are on central bankers and the pace of liquidity normalisation adopted by them.”
Coming to Fridays’ fall, Sensex fell 889 points to close the session at 57,011 while NSE Nifty 50 closed 263 points lower to settle at 16,985.
Barring the Nifty IT, all of NSE’s sectoral gauges finished the day deep in the red. IT stocks gained after Accenture Plc forecasted better-than-expected second-quarter revenue and raised its annual business outlook.
