Sensex Tanks 867 Points On Interest Rate Hike Concerns; Nifty Settles Below 16,450

Indian equity benchmarks on Friday plunged sharply as investors worried that aggressive interest rate hikes to tame surging inflation may dent global economic growth. Reserve Bank of India (RBI) had raised the repo rate by 40 basis points (bps) to 4.40 per cent in an off-cycle meeting on Wednesday. Repo rate is the rate at which a central bank lends money to banks.

U.S. Federal Reserve has hiked its benchmark overnight interest rate by half a percentage point (50 bps), the biggest jump in 22 years, to tackle inflation. Bank of England has also raised its key interest rate to the highest level in 13 years.

Back home, the 30-share BSE Sensex slumped 867 points or 1.56 per cent to close at 54,836, while the broader NSE Nifty moved 271 points or 1.63 per cent down to settle at 16,411.

Tracking an extremely weak trend in equities, the market capitalisation of BSE-listed firms tumbled Rs 4.47 lakh crore to Rs 255.17 lakh crore

Mid- and small-cap shares finished weak as Nifty Midcap 100 fell 1.79 per cent and small-cap dived 2.53 per cent.

"Indian equity markets continued to remain volatile amidst worry on rising interest rates, the Russia-Ukraine war and global commodity inflation. Global yields rose higher as a slew of hawkish remarks from the central banks reinforced expectations of tightening," Shibani Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company.

All of the 15 sector gauges -- compiled by the National Stock Exchange -- settled in the red. Nifty Financial Services, Nifty IT and Nifty Consumer Durables underperformed the index by falling as much as 2.25 per cent, 2.27 per cent and 2.29 per cent, respectively.

On the stock-specific front, Bajaj Finance was the top loser as the stock cracked 4.85 per cent to Rs 6,003.40. Divi's Lab, Shree Cement, UPL and Axis Bank were also among the losers.

The overall market breadth stood negative as 842 shares advanced while 2,513 declined on BSE.

On the 30-share BSE index, Bajaj Finance, Axis Bank, Bajaj Finserv, Nestle India, Wipro, HDFC twins (HDFC and HDFC Bank), Wipro, Infosys and TCS were among the top laggards.

In contrast, Tech Mahindra, PowerGrid, ITC, SBI, NTPC and Sun Pharma finished in the green.

Meanwhile, state-insurer Life Insurance Corporation of India's (LIC's) initial share sale was oversubscribed 1.27 times.