Sensex Ends A Whopping 1500 Pts Lower On Fed Jitters, Rs 6 Lakh Crores Gone

The Sensex saw one of its worst fall in recent times, with the benchmark index ending a whopping 1500 points lower. The scale of destruction saw investor wealth of Rs 6 lakh crores gone. The rupee too dropped to a historic low of 78.24, as demand for the US dollar surged.

The prime reason for the fall in the markets is on fears that the US Fed would hike interest rates faster and with a larger quantum. Until last week ahead of the US Inflation data, investors were pricing in an interest rate hike of 50 basis points and now they say 75 basis points is also a possibility. The US inflation data came in at 8.6%, the highest levels since Dec 1981. This led to a belief that the US Fed would hike interest rates faster making bonds more attractive than equities.

Stocks like Bajaj Finance, Bajaj Finserv, Hindalco, IndusInd Bank and Tech Mahindra lost between 5 to 6% in trade. Nestle and Bajaj Auto were the only one from the Nifty that managed to stay resilient and ended the day marginally higher.

Says Hemang Jani, Head Equity Strategy, Motilal Oswal Financial Services, "Nifty opened gap down as equity markets across globe are witnessing a sell-off after US May inflation data accelerated to four decades high which raised concerns about aggressive rate hikes by US Fed in the upcoming monetary policy meet due this wednesday. US treasury yields surged to 14 year high at 3.15% while dollar index spiked above 104 levels. US futures are also down ~1%. On the domestic side, India's inflation data is due today on account of which nervousness is likely to be seen in the market. Apart from these market would continue to remain cautious ahead of various central banks meetings in this week."

Investors are advised caution ahead of the US Fed Meeting outcome.