Fed's rate hike plan spooks Dalal Street, stocks fall for 2nd week in a row

Mumbai: Indian share indices ended down over 1% on Friday, logging losses for the second straight week as global markets weakened after the US Federal Reserve hinted at increasingly aggressive rate hikes. US Federal Reserve chair Jerome Powell said on Thursday that a half-point rate hike will be on the table when the Fed meets in May. He also said it would be appropriate to be moving a little more quickly on rate increases.

Sensex ended down 1.23% at 57,197.15 points and Nifty fell 1.27% to 17,171.95. Both the indices had gained over 1% the previous day, led by a rally in India's most valuable company Reliance Industries. Shares of State Bank of India, Hindustan Unilever, IndusInd Bank, Dr Reddy's Laboratories, Axis Bank, Bajaj Finserv, Infosys and ICICI Bank were the biggest casualties on the Sensex Friday, ending down 2-3%.
Foreign portfolio investors sold Indian shares worth ₹2,461.71 crore and domestic institutional investors bought local shares worth ₹1,602.35 crore.

While world markets have tided over the initial selloff due to the war in Ukraine, risks persist as developments occur. Indian markets have seen an additional jolt recently as tech companies Tata Consultancy Services and Infosys have missed earnings expectations. Another set of index heavyweights - HDFC Bank and Housing Development Finance Corp, which are set to merge - have been on the sell radar of foreign investors. Investors are bracing for earnings downgrades amid high inflation and resultant margin pressure. They are also keeping a wary eye on the rise in Covid cases.

"In addition to macro concerns, there is an expectation that companies could see downgrades for the March quarter and next quarter due to margin pressure," said Vinit Sambre, head of equities at DSP Investment Managers. "Markets are trying to price that in and adjustments will take place as earnings are reported and what managements guide."