The stock market benchmark fell on Thursday, extending losses from the previous session, tracking a slump in global markets after the Federal Reserve raised interest rates by 0.75% and expected policy rates to peak higher in this tightening cycle.

While the Fed’s move was widely predicted, the expected path spooked global markets, sending stocks sharply lower, the dollar rising to fresh 20-year highs and deepening the inverted US Treasury yield curve.

“Local equities are likely to follow other Asian indices lower Thursday morning after the Fed chair hinted that interest rates could rise further to combat a decade of high inflation,” said Prashanth Tapse, senior vice president of research at Mehta Equities, who previously said.

“Earlier, the Fed raised its policy rate by 75 basis points as expected, but the central bank’s announcement that further rate hikes are possible in the coming months soured sentiment, sending US markets trading sharply lower overnight,” he added.

The BSE Sensex was down 483.71 points at 58,973.07 in early trade, and the NSE Nifty was down 137.95 points at 17,580.40. “From an Indian market perspective, the big question is whether India’s outperformance will continue in the current global risk-off environment. Investors can remain optimistic but cautious given India’s high valuation,” Geojit Financial Chief Investment Strategist V K Vijayakumar Services told ANI.

“Financials, capital goods, select autos, telecoms and construction-related stocks can be bought on dips,” Mr Vijayakumar said.

Russian President Vladimir Putin’s mobilisation of more troops for the war in Ukraine also prompted investors to turn to safe-haven assets, hurting risk assets globally.

Stocks in China, Japan and South Korea fell, US futures fell, and Asian shares hit two-year lows after the S&P 500 fell more than 20% from a record high in January. Hong Kong’s benchmark stock index fell to its lowest point since 2011, led by Chinese tech stocks.

Japan’s Nikkei fell 1%. While the Golden Dragon index of Chinese stocks traded on US exchanges fell 5.9% overnight, Hang Seng futures were flat.

The inversion of the US yield curve widened in overnight trade as investors ruled out a “soft” landing for the economy and prepared to hurt longer-term growth while selling short-term Treasuries and buying longer-dated Treasuries, Reuters reported.

“The likelihood of a soft landing is likely to decrease, so policy needs to be tighter or more restrictive,” Fed Chairman Jerome Powell told reporters after announcing the rate hike.

According to Bloomberg, the escalating war between Russia and Ukraine and tensions between Beijing and Taiwan further dampened sentiment.