The BSE Sensex tanked 420 points to close below the 61000-mark and the rupee took a hit of 38 paise against the dollar as nervous investors awaited US inflation data that will indicate whether the US Federal Reserve will moderate its aggressive pace of interest rate hikes.
Declining for the second straight session, the 30-share BSE benchmark ended 0.69 per cent lower at 60613.70. The index moved between a high of 60848.73 and a low of 60425.47. On similar lines, the broader NSE Nifty fell 128.80 points or 0.71 per cent to end at 18028.20.
US inflation rate in October — the data was released in the evening — fell for the fourth straight month to 7.7 per cent. Market circles said this may result in stocks rising at the start of trading on Friday.
The latest inflation numbers could bump up expectations of the Fed lowering its rate hike trajectory, which is negative for the dollar. After the numbers were released, the Dollar Index, which measures the performance of the US currency against a basket of six currencies, was trading lower at 108.85 against 110.75 earlier and the previous close of 110.55.
The Fed has raised rates by 75 basis points on four straight occasions and with more increases in store, there are fears that the US economy would slip into a recession.
"Following sluggish global markets, the cautious mood persisted in the domestic market. The losses were led by profit booking in auto and PSU banks, while selling in mid and small-caps followed the trend. Investors around the globe are awaiting US inflation data, which is expected to slow for the fourth month, which can have a positive lead,” Vinod Nair, head of research at Geojit Financial Services, said.
At the broader market level, the BSE midcap index declined 1.02 per cent, while the small-cap gauge lost 1.05 per cent. All sectoral indices closed in the red, with auto, consumer durables and metal the worst hit.
While the domestic markets have outperformed global indices on strong quarterly results and robust festival season demand, there are concerns about expensive valuations in some pockets.
Meanwhile, provisional data from the stock exchanges showed foreign portfolio investors being net sellers to the tune of Rs 967 crore. They have made net purchases of Rs 19,367 crore this month.
At the inter-bank forex markets, the rupee settled at 81.81 against the dollar against its previous close of 81.65.
Equity MFs
Inflows into equity mutual funds in October fell 33 per cent in October at Rs 9,390 crore over the preceding month as investors booked profits in a market that outperformed its global peers.
Equity mutual funds had witnessed an inflow of nearly Rs 14,100 crore in September. Though the sequential number is lower, it marks the 20th straight month of inflows into equity mutual funds.
Equity schemes have been witnessing net inflows since March 2021. Earlier, they had seen outflows for eight months from July 2020 to February 2021.
The numbers released by the Association of Mutual Funds in India (Amfi) showed investors continuing to trust systematic investment plans, or SIPs. Monthly flows through this route rose to an all-time high of Rs 13,040 crore in October. It surpassed the Rs 12,976 crore inflow seen in September.
Inflows through SIPs have been above the Rs 12,000-crore mark since May. The total inflow has reached over Rs 87,000 crore in the first seven months of the current fiscal. It stood at over Rs 1.24 lakh crore in 2021-22.
“Markets continue to react to global factors and domestic rate hikes. However, mutual fund investors have shown resilience and continue to invest in SIPs, with a consistent contribution. There is growth in overall equity AUM and folios too,” N.S. Venkatesh, Amfi CEO, said.
