Indian stock indices opened in the red on Monday, following a sell-off in Asian equities, driven by fears of an economic slowdown due to expected aggressive monetary policy tightening by major central banks, led by the US Federal Reserve.
The BSE Sensex index fell more than 470 points to 56,711 and the Nifty 50 index fell to 17.007, adding to last week’s loss.
Last week, eight of the top 10 most valued companies by market capitalization lost ₹2,21,555.61 crore from their valuation, in line with the weak trend in the broader market, with Infosys and HDFC Bank taking the biggest blow.
On Monday, shares fell across the board, with 49 of the 50 stocks on the Nifty 50 index trading lower.
ICICI Bank was the sole winner, up 1.5 percent after it reported a nearly 60 percent increase in net profit to 7,018.71 crore in the January-March quarter of a year ago.
Future Group companies fell — Future Retail fell 5 percent, Future Consumer crashed 19.4 percent, while Future Enterprises fell 9.5 percent, amid growing concerns that the group is at risk of bankruptcy.
Reliance on Saturday canceled its Rs 24,713 crore deal after Future Group’s secured creditors voted against.
The ongoing conflict between Russia and Ukraine, runaway inflation concerns and the expected response from global central banks, especially the Fed, have weighed on investor sentiment.
As price stability is the most important mandate for global central banks, expectations of aggressive rate hikes and the ensuing slowdown in economic growth have upset investors.
Also during the global policy tightening phase, investors prefer to hide in assets that are considered safe.
Crude oil fell by nearly $3 to below $104 a barrel on demand concerns over China’s restrictions and concerns about economic growth.
Those global signals combined with weaker-than-expected quarterly corporate earnings have not helped Indian equities.
Fears of aggressive rate hikes by the Fed have indeed dampened risk sentiment, with foreign investors withdrawing nearly 12,300 crore from Indian stocks so far this month.