Sensex slides 600 points as fears of faster Fed rate hike spook bulls

NEW DELHI: After opening on a negative note, domestic benchmark equity indices extended their slide on Monday as strong jobs data in the US increased fears of sharper than expected Fed rate hikes. There was slight weakness in crude oil prices on hopes of progress in US-Iran nuclear talks, yet Brent was still hovering near $93 a barrel mark, raising inflationary concerns.

At 11.16 am, the BSE Sensex was trading 586 points, or 1 per cent, lower at 58,058. The NSE Nifty50 stood at 17,330, down 185 points or 1.06 per cent.

"The spike in US 10-year bond yield reflects the increasing concerns of high inflation and the Fed being behind the curve. The January jobs report in the US at 4.67 lakh new jobs was way ahead of market expectations. Now it is beyond doubt that the Fed will have to act tough on inflation. If the Fed turns highly hawkish and delivers a 50bp rate hike in March, that can cause a sharp correction in markets," said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Cues were mixed from other Asian markets that opened for trading after long public holidays.

The two domestic indices climbed about 2.5 per cent last week, thanks to a strong Budget, even as weak global cues such as rising oil prices and volatility US stocks kept them on edge.

On Monday, Dr Reddy's Labs jumped 5.74 per cent to Rs 4,600 after it announced that the Drugs Controller General of India (DCGI) granted approval to the single-shot Sputnik Light vaccine for restricted use in emergency situations in India.

Shares of Paytm were trading flat at Rs 954.05 after its third quarter results. Goldman Sachs has a target of Rs 1,460 on the stock.

Bajaj Finance declined 1.4 per cent to Rs 7,056. M&M dropped 1 per cent to Rs 832. HDFC Bank, Bharti Airtel, Infosys, Dr Reddy's Labs and HDFC fell up to 1 per cent. Power Grid, NTPC and UltraTech Cement added up to 1.43 per cent. SBI edged 0.31 per cent higher to Rs 531.90.

PB Fintech, Tube Investments of India, Union Bank of India, TVS Motor Company, Minda Industries, GSK Pharma, Sundaram Finance, Clean Science & Technologies, KPR Mills, National Aluminium, Indian Bank, Phoenix Mills and Castrol India are among the companies that will announce their December quarter results today.

The week will see investors reacting to the RBI policy outcome on Thursday, its commentary on inflation, IIP reading, quarterly earnings and trends in the bond market.