Negative cues from Asian markets, expectation of a US rate hike, weakening monsoon and a falling rupee eroded investor confidence in the Indian equity markets- leading a barometer index to fall over 107 points during the late afternoon session on Monday.The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) receded by 107.10 points or 0.42 percent. All the 12 sectoral indices of the BSE were trading in the red.Furthermore, a flat trajectory was witnessed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). It declined by 39.30 points or 0.51 percent at 7,615.75 points. The S&P BSE Sensex, which opened at 25,302.98 points, was trading at 25,094.80 points (at 2.15 p.m.) -- down 107.10 points or 0.42 percent from the previous day's close at 25,201.90 points.
The Sensex touched a high of 25,387.32 points and a low of 25,056.80 points in the intra-day trade so far.Analysts elaborated that the markets were in an over-sold position, which hindered the investors to chase higher prices. In addition, lack of positive triggers and the expectation of a US rate hike have flared anxiety. "Investors are reluctant to chase higher prices. Markets are in an over-sold position. There are no new triggers for the markets to react," Alex Mathews, head, research, Geojit BNP Paribas Financial Services."Expectations of a US rate hike and reports about a weak monsoon and falling rupee has dented investor confidence."The US Fed is expected to announce its decision to hike interest rates after a decade or so of easy monetary regime with interest rates pegged at near zero levels during its policy meet scheduled on September 16-17.
High interest rates in the US are expected to lead away the foreign portfolio investors (FPIs) from emerging markets like India. It is also expected to dent business margins as access to capital from the US will become expensive.Mathews pointed out that Asian markets' cues remain negative, after the Chinese exchanges started trading after a long weekend holiday. The Chinese exchanges were closed from Sep 3-4, on account of Victory Day celebrations held to commemorate China's victory over Japan in the Second World War. Sector-wise, intense selling was observed in BSE's healthcare, capital goods, automobile, metal and banking stocks. The S&P BSE healthcare index plunged by 282.88 points, capital goods index receded by 154.99 points, automobile index declined by 139.50 points, metal index lost by 118.85 points and banking index dropped by 92.70 points.