MUMBAI: Equity benchmarks reeled for the fifth straight day to finish at over one-year lows on Thursday, in tandem with weak global equities, after the US Federal Reserve hiked rates by 75 basis points to tame surging inflation.
The US central bank delivered its biggest interest rate hike since 1994 and indicated further policy tightening this year as the focus shifts to taming price rise which has soared to over four-decade highs.
The Fed also projected slowing US economic growth.
Across-the-board selling played havoc on the domestic indices, with index majors Reliance Industries and HDFC twins contributing most to the decline.
Despite a smart rally in morning trade, the BSE benchmark Sensex failed to hold on to the gains and plummeted 1,045.60 points or 1.99 per cent to settle at 51,495.79 -- the lowest in over 12 months.
On similar lines, the NSE Nifty plunged 331.55 points or 2.11 per cent to close at 15,360.60.
Investors lost Rs 5.54 lakh crore in Thursday's session, with the market capitalisation of all BSE-listed firms standing at Rs 2,39,20,631.65 crore.
Barring Nestle India, all Sensex stocks closed in the red, led by Tata Steel, Tech Mahindra, Bharti Airtel, Wipro, IndusInd Bank, Bajaj Finance, Kotak Mahindra Bank, NTPC, and Bajaj Finserv, tumbling as much as 6.04 per cent.
"The early gains led by an in-line Fed policy was dampened as recessionary fears haunted global sentiments. A cut in growth projection and hints of continuation of aggressive policy in the next meeting instilled chances of a recession in the US economy.
"In this current scenario, safe sectors will be those that are least impacted by inflation and aggressive policy like finance and services. Defensives like consumption, IT, pharma and telecom are worthwhile on a long-term basis," said Vinod Nair, Head of Research at Geojit Financial Services.
S Ranganathan, Head of Research at LKP Securities, said as the street prepares for further front-loaded action by central banks in a bid to anchor spiralling inflation, its impact on consumer spending kept investors on the backfoot.
"A mere glance at the stocks hitting one-year lows today is reflective of the risk-off mood on the street as only a handful of FMCG stocks displayed a green tick among frontliners," he added.
In the broader market, the BSE smallcap gauge tumbled 2.87 per cent and the midcap index lost 2.34 per cent.
All the BSE sectoral indices ended lower, with metal cracking 5.48 per cent, followed by basic materials (3.55 per cent), industrials (3.06 per cent), telecom (3.04 per cent), realty (2.69 per cent), teck (2.51 per cent), IT (2.48 per cent) and utilities (2.39 per cent).
As many as 2,754 stocks declined, while 620 advanced and 100 remained unchanged.
Elsewhere in Asia, markets in Shanghai and Hong Kong settled lower, while Tokyo and Seoul ended marginally higher.
Markets in Europe were trading sharply lower in mid-session deals after the Swiss National Bank raised its policy rate for the first time in 15 years.
Wall Street had ended with smart gains in the overnight session on Wednesday as the Fed rate hike was in line with expectations. Meanwhile, international oil benchmark Brent crude dipped 0.66 per cent to USD 117.68 per barrel.
The rupee on Thursday recovered from its record low to close 12 paise higher at 78.10 (provisional) against the American currency, tracking the overnight weakness of the dollar and falling crude oil prices.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 3,531.15 crore on Wednesday, as per exchange data.