D-Street indices extend slide, decline nearly 1%

India’s share indices declined nearly 1% on Wednesday, extending the slide to the sixth straight session, as heightening concerns over a global recession pushed investors out of riskier emerging markets to safe-haven assets like the dollar. Foreign funds continued to cut exposure to Indian equities with the dollar extending its winning run against the rupee, which closed at 81.94, down 0.45%.

Sensex closed at 56,598.28, down 509.24 points, or 0.89% from Tuesday’s close. Nifty lost 148.80 points or 0.87% to close at 16,858.60 – breaching its 200-day moving average (DMA), a key trend indicator, of 16,986.91. When a stock or an index slips and stays below its 200 DMA, it’s considered bearish.

The fall mirrors similar declines in key Asian and overnight US indices as central banks have pledged to intensify their battle against inflation by keeping interest rates elevated.

On Monday, US Fed officials reiterated their hawkish stance, shaking investor confidence further amid growing worries that higher rates will result in a recession. The pound on Wednesday resumed declines after a brief respite after the Bank of England said it would intervene in the country’s jittery bond markets. The pan-Europe stock benchmark Stoxx 600 was up 0.3% after falling nearly 2% earlier in the session. In US, the S&P 500 climbed as much as 1.8%, rising for the first time since the Fed boosted rates.

The Indian rupee slipped to its fresh all-time lows of 81.94 ahead of the Reserve Bank of India‘s policy announcement on Friday, when the central bank is expected to raise rates.

“For the near-term, FPI flows and fund activity will decide the course of action and given the recent outperformance and expensive valuations, foreign funds may be taking an alternative view,” said Raamdeo Agrawal, chairman and cofounder of Motilal Oswal Financial Services. “Entire global macro and geopolitical scenario looks concerning, but the biggest problem for the Indian economy is the spike in crude oil prices, which is cooling off.”

Foreign portfolio investors (FPIs) sold shares worth Rs 2,772.49 crore in the cash segment, as per provisional data from the stock exchanges. This takes outflows to over Rs 15,571 crore in the past six sessions. In September so far, they have sold to the tune of Rs 8,687 crore.

Overseas, the US two and 10-year securities rose to multi-year highs, which analysts believe is a worrying sign for world equities. The yield on the US benchmark 10-year bond spiked to its highest since 2010 while the more rate-sensitive two-year bond yield surged to the highest point since mid-to-late 2007.

At home, 18 out of 30 Sensex stocks ended in the red and market breadth for all listed scrips remained weak. As many as 2,161 stocks declined compared with shares of 1,277 companies that ended in the green on Wednesday. Barring IT, healthcare and consumer discretionary goods, all sectoral indices ended weak. Metal companies were the top losers, with the BSE Metal index losing 2.32%. The Bank Nifty declined 1.56%, while the BSE Power index fell more than a percent.

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