Prior to the Federal Reserve’s annual Jackson Hole symposium, domestic benchmark indices in Sensex experienced a steep decline on Monday due to rising currency and US bond yields. Futures and options traders were also watching the expiration of monthly derivatives.
Analysts anticipated selling at highs because the indices were in the overbought zone. Additionally, the Asian stock markets were mainly mixed and provided little assistance for domestic stocks.
The BSE Sensex plunged 872 points or 1.46 percent, closing at 58,773.87, below the 59,000 barrier. Nifty50, on the other hand, dropped 267.8 points to finish at 17,490.70.
The only two shares from the pack of 30 to end above the flatline were ITC and Nestle, while Tata Steel, Asian Paints, Wipro, Sun Pharma, L&T, and Bajaj Finance all declined by 3% each. UltraTech, Bajaj Finserv, Kotak Mahindra Bank, Axis Bank, Tech Mahindra, ICICI Bank, and SBI melted 2%.
Sensex and Nifty outperformed broader markets, which lagged by 2 percent each. The day finished with decreases for all sectoral indices, with Nifty Metal down 3%, Nifty Auto, Realty, PSU Bank, and Financial Services all losing 2%.
Market capitalization for BSE-listed companies was Rs 273.99 lakh crore as of August 18, down Rs 6.53 lakh crore in two sessions from Rs 280.52 lakh crore.
Dollar
Analysts noted that the Dollar index is currently trading close to the mid-July high amid growing concerns about the health of the European and Chinese economies and generally hawkish remarks from Fed officials.
The dollar index was trading unchanged at 108 on Monday. On the other hand, as of August 1, US bond yields were 2.588% higher than they were on July 1.
The recent hawkish posture of numerous US Fed members ahead of the Jackson Hole Symposium on August 25–27 contributes to the dollar’s rise.
According to Nomura India, the minutes of the July FOMC meeting show that the Fed has begun to recognize the risk of overtightening to regain price stability, showing a slight shift towards both inflation and growth sensitivity.
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