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Sensex loses 530 points, Nifty loses 172 points due to concerns about Fed rate hike

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Benchmark Sensex tumbled 530 points and the wider useful lost 172 points in early trading Wednesday on concerns over further US rate hikes Federal Reserve to tame inflation and weak global signals scared investor sentiment.



After four consecutive gains, the 30-stock Sensex fell 530.36 points, or 0.88 percent, to 60,040.72 points, while the Nifty fell 150.75 points, or 0.83 percent, to 17,919.30 points.

As many as 21 stocks, including Reliance Industries, from the Sensex package fell in early trading amid significant volatility.

Asian markets were in negative territory amid expectations of aggressive rate hikes by the Federal Reserve to tackle inflation, which was higher than expected in August. The US and European stock markets also closed in the red on Tuesday.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, said Tuesday’s 4.32 percent and 5.12 percent cuts in the S&P 500 and Nasdaq are another reminder that there is more uncertainty about inflation and growth and more volatility for the markets.

The worse-than-expected US CPI inflation data, despite cooling gas prices, was a surprise. Now the market fears inflation is becoming entrenched and an ultra-hawkish fed could lead to a hard landing for the US economy,” he said.

On Tuesday, the 30-stock Sensex rose 455.95 points, or 0.76 percent, to close to its five-month high of 60,571.08, while the broader Nifty climbed 133.70 points, or 0.75 percent, to settle at 18,070.05. Previously, the Nifty closed above the 18,000 mark on April 4 this year.

In the last four sessions, Sensex had gained more than 1,540 points or 2.59 percent, while Nifty was up 445 points or 2.9 percent.

US inflation rose 8.3 percent year-on-year in August, against an expectation of 8.1 percent. It rose 0.1 percent month-over-month, while economists expected it to fall 0.1 percent, said Ritika Chhabra – Economist and Quant Analyst at Prabhudas Lilladher.

“As inflation is more persistent than expected, it is highly likely that the Fed will go for another 75 basis point jumbo rate hike at the next FOMC (Federal Open Market Committee) meeting,” Chhabra said.

Foreign institutional investors injected Rs 1,956.98 crore in domestic equities on Tuesday, according to data available from BSE.

Brent oil futures were slightly higher U.S. dollar 93.32 per barrel.

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