Sensex Dives 350 Points As US Fed Hike Rattles Global Markets

Benchmark indices opened the day lower with the Sensex and the Nifty falling in line with global markets. The Dow Jones had fallen a massive 500 points after the US Fed hiked rates by 25 basis points. The Japanese Nikkei, the Topix and Australia's S&P ASX 200 were all lower in trade.

Indian markets too fell following Asian peers lower in trade today, as global markets mostly move in tandem after a big event. The Sensex was down 353 points at 9.28 am, while the Nifty dropped 100 points in trade.

While markets were anticipating a 25 basis points, the fall across the US markets came largely from comments by US Treasury Secretary, Yellen which stated that there no plans to insure bank deposits. So, markets have not really reacted to the Fed decision, but, more so to the comments by Yellen.
Asian Paints, Adani and Wipro were the top losers in trade, while HeroMoto Corp and Larsen gained ground.

The global banking sector problems have also come to the fore in playing a spoilsport for the markets. However, Emkay Global does not see contagion risks. "We do not see elevated risks of contagion, as we view the recent events as idiosyncratic. While the Fed's aggressive tightening may have caused some dislocations in certain sectors, this is not a liquidity crisis that is anywhere near comparable to that in 2008 or in 2020. While borrowings at the discount window were at a record high, the credit extended to the financial system in 2008/2020 was much greater, when accounting for various other programs then. The current funding markets remain orderly, MMF AUMs surged (seeing their largest 1-week inflow since Apr-20), Fed funds volumes plummeted and, while CP/CD spreads widened, some spreads are still hovering near their all-time lows," the brokerage has said.