The Sensex on Wednesday plummeted 796 points joining some of its other peers in Asia as investors shed positions ahead of US Federal Reserve's interest rate decision amid other headwinds such as US treasury yields hitting 16-year highs and crude oil prices staying firm.
Foreign fund outflows coupled to lack of any upside triggers back home also contributed to the poor show by equities.
However, market experts are of the view that given the positive economic outlook in India, investors should use the current opportunity to build positions in blue chips and that factors like upcoming festival season and stability in interest rates in addition to better corporate earnings should see domestic stocks outperforming others in the medium term.
Resuming after a day’s break, the 30-share benchmark index began on a weak note at 67080.18 and crashed to a day’s low of 66728.14, thus marking a fall of nearly 869 points, after which it closed with losses of 796 points or 1.18 per cent at 66800.84. Similarly, the NSE Nifty declined 231.90 points or 1.15 per cent to end below the 20000 mark at 19901.40.
``Domestic equities had a subdued start ahead of the US Fed policy outcome and US bond yields at a decadal highs. Weak global cues, surge in oil price to nearly 1-year high, and selling by FIIs are major concerns in the market. However, strong domestic economic data continue to support the market at lower levels," Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said.
As investors awaited the Fed decision, the 10-year US treasury touched a day’s high of 4.371 per cent against its previous close of nearly 4.36 per cent. It was trading at 4.33 per cent at the time of writing this report. Brent crude was trading at $ 93.40 a barrel compared with its last close of $ 94.34.
Among the Sensex stocks, HDFC Bank emerged as the biggest loser, falling 4 per cent.
The sell-off in HDFC Bank came after it told analysts in a call earlier this week that some of its key metrics could be impacted due to the recent merger with HDFC.
