Sensex tumbles over 400 pts after Fed rate hike, Nifty tests 17,600 level

Benchmark equity indices opened lower on Thursday after the US Fed delivered another steep rate hike of 75 basis points.

At 9.18 am, the BSE Sensex was trading 419.41 points or 0.71 per cent lower at 59,037.37. Nifty50 was trading at 17,585.70, down 132.60 points or 0.75 per cent.

V K Vijayakumar, Chief Investment Strategist at

said that while the Fed’s 75bp rate hike and reiteration of the hawkish message were on expected lines, indication that the terminal rate is likely to be 4.6 per cent was higher than market expectations.

US 10-year bond yield spiking above 3.5 per cent and the dollar index above 111 are unnerving for equity markets. Now the market feels that the probability of a US recession has increased to 75 per cent. In the backdrop of sharply slowing Eurozone and China, this is bad news for global growth, Vijayakumar added.

“The big question from the Indian market perspective is whether India’s outperformance will continue in the present global risk off context. Investors can remain optimistic but be cautious since India’s valuations are on the higher side,” Vijayakumar said.

More to come…