MUMBAI: As frontline stock indices fell more than a per cent each for a second straight session, equity analysts see a 5-10% correction from current levels. Nifty dived 218 points to close at 16953.95 while the Sensex shed 617 points at 56579.89, taking cues from Asian peers like Nikkei and Hang Seng which fared far worse with the latter tanking almost 4% on a rise in Covid cases on the mainland .
Globally, markets were spooked by a more hawkish stance by the US Federal Reserve which is anticipated to raise rates in early May by 50 basis points. A stronger dollar reduces the risk free return for US investors from emerging markets like India , resulting in their selling EM shares .
With renewed rate hike fears in the US taking root this month , FIIs have sold Indian shares over Rs 17000 crore so far this month . The selling is expected to continue , causing more choppiness in the market, going forward.
“We could see a 5-10% correction from the current levels in the near term , depending on global factors,” said Nirmal Jain , founder and chairman of IIFL Group . “But conditions back home aren’t as bad thanks to strong rural demand which will enable us to bounce back faster.”
Meanwhile , fears of a lockdown in China’s capital Beijing to curb a fresh Covid surge dampened sentiment in commodities with active Brent oil and WTI futures down 5% each at $101 a bbl and $97 intraday Monday . International contacts of aluminium and zinc too traded down 5% each on demand destruction fears from China . As risky asset classes fell , the dollar index which measures the USD against six global currencies , edged up by half a percent at 101.66, a five year high, on Monday.