BSE Sensex and Nifty fell sharply on Tuesday amid a slump in China markets and worries about interest rate hike in the US. Amid choppy trading, the Sensex ended 150 points lower at 25,705 while Nifty settled at 7,829, down 43 points.
Here are the top developments:
1) Analysts say that traders lightened their positions today ahead of the US Fed rate hike decision on Thursday. Indian markets will be closed on Thursday for a holiday.
2) Although the Fed has signalled it plans to lift interest rates in 2015 – which would be its first hike in nearly a decade – some analysts say turbulence in the global financial markets could prompt the US central bank to delay the rate hike. Worries over the growth of China’s economy have added uncertainty to global financial markets.
3) An interest rate hike in the US could accelerate the selling from foreign investors in Indian stock markets. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee.
4) The rupee today fell to 66.48/dollar at its day’s low, against its previous close of 66.32.
5) Foreign investors sold a record Rs 16,877 crore worth of domestic stocks in August, leading to the recent selloff in Indian markets. On top of that, they sold nearly Rs 6,000 crore this month so far though the selling pressure has eased in recent sessions.
6) Banking, metal, auto and capital goods stocks led the decline today.
7) Hopes of a rate cut from the Reserve Bank have brightened after inflation dived to a new low in August, helped by falling global commodity prices. Retail inflation, which the central bank tracks to set rates, eased to 3.66 per cent in August from a revised 3.69 per cent a month ago.
8) Many analysts see the Reserve Bank of India cutting rates by at least 25 bps later this month. The next RBI policy review is due on September 29.
9) Shanghai led most Asian shares lower Tuesday as China’s economic woes keep investors on edge, while Japan’s Nikkei gave up early gains after the country’s central bank held off fresh measures to shore up its torpid economy. China’s Shanghai Composite index finished 3.52 per cent down, extending a 2.67 per cent fall suffered Monday.
10) Also hurting the sentiment, European markets gave up early gains and were flat in early trade.