Mid-day Mood | Market extends fall on Fed rate hike fears, inflation worries; most sectors in red

Stock Market Today

The Indian equity market opened on a weak note, tracking losses in its global counterparts and consequently extended its fall, as the session progressed on August 17. The minutes of the US Federal Reserve's July monetary policy meeting, which hinted at the possibility of further rate hikes to tame sticky inflation, became the major trigger behind the slump.

A weak sentiment back home, fuelled by a sharp spike in the retail inflation print for July, aided to the drag on the market. India's consumer price index shot off to a 15-month high of 7.44 percent in July on the back of a surge in vegetable prices, led by tomatoes. This also marked the first time since February that the domestic CPI print came above the Reserve Bank of India's target band of 2-6 percent.

Sentiment for domestic equities remained subdued as a culmination of the two factors and led to the Nifty 50's fall below 19,400 on August 17. Around noon, the Sensex was down 341.27 points or 0.52 percent at 65,198.15, and the Nifty was down 99.20 points or 0.51 percent at 19,365.80.

"Growing pessimism due to China's slowdown and more interest rate hikes going ahead will make investors risk-averse towards equity markets. Besides, rising US bond yields and its impact on currencies across the globe will push foreign investors towards safe haven US dollar,"  said Prashanth Tapse, Senior VP (Research), Mehta Equities.

"On the technical front, caution will persist until the benchmark Nifty is unable to cross the 19,757 mark," he said.

Adani Ports and Special Economic Zone led the gainers on the Nifty50, rising nearly 2 percent following a small bulk deal in the counter. Another Adani-group company, Adani Power, also gained 3 percent, recouping all losses from the previous session after it was revealed that Rajiv Jain's GQG Partners bought an 8.1 percent stake in the company on August 16.

Shriram Finance was another stock in the spotlight, surging 3 percent after foreign brokerage UBS Securities initiated coverage on the scrip with a 'buy' call.

Among losers, Cipla was down around a percent after the Konkan division of Food and Drug administration decided to suspend the licence for its Patalganga manufacturing unit for 10 days in December 2023. JSW Energy also dropped 3 percent after its promoter divested a 1.4 percent stake in the company in the previous session.

Most sectors too, including auto, energy, FMCG, infra, IT, metal and pharma, were under pressure, down 0.5-0.8 percent. Among the outliers was the Nifty PSU bank index, which edged up 0.7 percent.

In today's trade, however, the broader market fared better than the headline indices. The Nifty Midcap 100 index was up 0.2 percent, while Nifty Smallcap 100 was trading 0.4 percent higher.