NEW DELHI: India’s equity market finally gave up its resilience to negative global cues, as domestic benchmarks indices tumbled sharply by nearly 1.7% on Friday after several central banks hiked key lending rates amid looming recession fears.
Sensex shed more than 1,000 points to close at 58,100, while the broader Nifty tanked 300 points to end the week at 17,327. Rupee also hit a new low during today’s session, as it breached the 81/US dollar mark.
After the Federal Reserve announced a 75 bps rate hike to tame the rising inflation in the US, many other central banks across the globe followed suit.
The Bank of England raised its key lending rate by 0.5% to 2.25%, which is highest in 14-year. The RBI is also expected to follow this global practice and may go for a rate hike of 35-50 bps next week, as consumer inflation in India continues to remain above the ‘comfortable’ range.
This, according to market experts, beside slowing down global growth will tighten liquidity in the equity markets worldwide and is a big negative for emerging markets such as India where foreign investor participation is very prominent.