India’s stock benchmark fell on Friday, tracking pessimism in global markets, as data from the world’s largest economy offered little reason to ease the Fed’s COVID-era rate hike cycle to fight blazing inflation. Losses in the financials, IT, metals and oil and gas sectors dragged the market lower.

Both major indexes were down 0.9% in the first few minutes of trading. The Sensex fell 538.2 points to 59,395.8, its lowest level for the day, and the Nifty50 fell to 17,716.10, down 161.3 points from its previous close.

Tech Mahindra, HDFC Bank, HDFC, ONGC and TCS are the biggest laggards in the Nifty50 basket. Bajaj Auto, UPL, Sun Pharma, Cipla, Hero MotoCorp, Asian Paints and Divi’s (up as much as 1%) were the 22 biggest gainers of the 50 stocks.

HDFC Twins, ICICI Bank, Reliance and ITC, were the biggest contributors to the decline in the two indices.
“Markets are starting to show signs of weakness. Globally, the main concern right now is that the Fed may over-steer and ultimately raise rates too quickly, pushing the US economy into a deep recession. Rumours are that the Fed will eventually rise to 4.25%.” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

According to data released on Thursday, US retail sales unexpectedly rebounded in August, but last month’s data was revised downwards to show a decline from a previously reported no-change.

Separately, initial jobless claims for the week ended September 10 fell to the lowest level since late May.
“A sharp rise in interest rates, rising bond yields and a rising dollar are bad for equities. In this challenging environment, India will struggle to maintain its recent pattern of decoupling from global trends,” Vijayakumar said.
Overall, market breadth remained largely neutral, with 1,316 BSE stocks advancing and 1,228 declining. The rupee was slightly lower against the dollar. It was now 0.4% above its all-time low hit late last month.

Shares of other Asian markets fell sharply, reflecting overnight weakness on Wall Street, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 1% at the last calculation. Major indexes in Japan, China and Hong Kong also fell about 1% each. S&P 500 futures fell 0.6%. On Thursday, the S&P 500 lost 1.1%, the Dow lost 0.6%, and the tech-heavy Nasdaq Composite lost 1.4%.