Nervous investors dumped stocks on Monday fearing the US Federal Reserve may adopt a more hawkish stand at its policy meeting this week amid tensions in the Russia-Ukraine border that could lead to a flare up in crude oil prices.

The benchmark indices — Sensex and Nifty — suffered their worst intra-day fall in nine months while investors were poorer by over Rs 9.13 lakh crore. The Sensex fell over 2053 points and the Nifty 619.3 points in intra-day trades, their biggest since April last year.

While the 30-share index finally ended with losses of 1545.67 points to finish below the 58000-mark at 57491.51, the broader Nifty fell 468.05 points to 17149.10. It was the fifth straight day of loss for the benchmarks with the Sensex tanking over 3800 points in this period.

The Indian markets took their cues from a global sell-off ahead of the two-day meeting of the Fed from Tuesday. The US central bank is largely expected to communicate an interest rate hike in March,the first in over three years.

Although investors have largely discounted this outlook, they are nervous that Fed chair Jerome Powell may indicate a steeper hike of 50 basis points in March or hint at 4-5 rate hikes this year to combat rising inflation.

Investors are also closely watching Powell’s statement on the tapering of the monetary stimulus to fight the pandemic. Domestic results have proved to be a mixed bag so far, while foreign portfolio investors (FPIs) continue to be in a sell mode. Provisional data on Monday showed that they sold stocks worth Rs 3,149 crore.

The upcoming Union budget is influencing sentiment. There are rumours the long-term capital gains tax may be raised and finance minister Nirmala Sitharaman may re-introduce wealth tax which was abolished from the fiscal year 2016-17. Observers warn these could be negative for the stock markets.

“Fears of higher-than-expected rate tightening by the Fed and the heightened tensions on the Russia-Ukraine border had created the perfect storm that spooked the markets. Foreign portfolio investors (FPIs) have been stepping up their sales during the last several days, V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, said.

Newbies lose

Shares of some of the new-age companies ended deep in the red on Monday raising questions on their valuation.

Counters such as FSN E-Commerce Ventures Ltd which owns the Nykaa brand, Zomato, PB Fintech and One97 Communications, the Paytm parent, saw losses of up to 20 per cent.

The Paytm share hit a new low of Rs 881.05 during intra-day trades — a fall of 55 per cent from its 52-week high of Rs 1,961.05. Nykaa shares have fallen 33 per cent from its high of Rs 2,574, with its market cap now at Rs 82,000 crore against more than Rs 1 lakh crore at the time of listing.

PB Fintech settled 10.16 per cent lower at Rs 776.60, down 47 per cent from its 52-week high reached on November 17.

Similarly, the shares of online restaurant aggregator Zomato fell below the Rs 100-mark to close at Rs 91.40 in the BSE, down 19.65 per cent. It has dropped almost 46 per cent from its 52-week high of Rs 169.10 on November 16.

Analysts are now questioning their valuations at the time of IPO. They said the valuations were driven by abundant liquidity. With monetary policy tightening and policy normalisation on the cards, it is felt the start-ups will have to be more realistic as investors will watch out for factors such as their profitability plans.

Deepinder Goyal, the founder and CEO of Zomato, said in a mail to his employees that valuations can swing massively without any change in the fundamentals of the business depending on macro-economic factors such as inflation and interest rates. “We had no control on our valuation going up from $8 billion in the IPO to $17 billion at our peak, and vice versa now’’.

Rupee slump

The rupee on Monday slumped 17 paise to close at a more than three-week low of 74.60 against the dollar because of high crude oil prices, forex outflows and heavy losses in domestic equities amid growing geopolitical worries.

Forex traders said the strength of the American currency in the overseas market and weak appetite for riskier assets dragged down the local unit. The rupee opened at 74.43 and witnessed an intra-day high of 74.42 and a low of 74.69.

It finally settled down 17 paise or 0.23 per cent at 74.60, the lowest since December 27, 2021.