Table of Contents
What has happaened?
- Domestic stocks on Monday joined global rout, sinking over 2%, as data showed US inflation at fresh 40-year high in May at 8.6%, Weakening the narrative of ‘peaking inflation’ and opening up doors for aggressive Fed rate hikes ahead.
- Asian markets were all in the red, falling up to 2.7 per cent. US stock futures fell 1.3 per cent. India was no exception.
- Adding fuel to the fire was a Covid outbreak that emerged in Beijing’s most populous district of Chaoyang, where three rounds of mass testing has been announced, spurring lockdowns and growth concerns.
Worst hit sectors
- Overall, four stocks on BSE declined for every one that advanced.
- A total of BSE 168 stocks had hit their respective lower circuits.
- Real estate, bank and metals stocks were worst hit, with the sectoral indices falling up to 3.5 per cent.
- Real estate stocks such as Godrej Properties, DLF, Indiabulls Real Estate and Sobha fell 4-6 per cent. Metal stocks Hindalco, SAIL, Vedanta and Jindal Steel plunged up to 4.3 per cent. Among banks, Bank of Baroda was worst hit, falling 5.09 per cent t
US inflation numbers
- The inflation numbers in the world’s largest economy are expected to remain hot, around four-decade high, inducing the tighter monetary policy by the Federal Reserve and dampening the sentiments for equity markets.
- Supply disruptions tied to the pandemic and the war in Ukraine, along with a revival in consumer demand for services rather than goods, have pushed prices up at the fastest pace in about 40 years.
- Investors were nervous about a potential slowdown in the economic growth in the wake of the Federal Reserve’s monetary policy tightening.
- The rupee slipped 36 paise to its all-time low of 78.29 against the US dollar in early trade on Monday,
- Tracking the strength of the American currency overseas as investors flocked to the safe-haven currency amid an overall risk-averse sentiment.
- Forex traders said weak Asian currencies, a lacklustre trend in domestic equities and persistent foreign capital outflows weighed on investor sentiments.
Oil on a boil
- The rise in crude oil prices to new peaks has been hurting India’s import bill, which majorly constitutes petroleum products.
- Despite a drop on Friday, crude prices hovered near three-month high.
- Oil prices have been rallying steadily over the last two months, led by big increases in prices of refined products due to tight refining supply and surging demand.
FII selling
- Global investors have been pulling money out from Indian markets, thanks to the weakening rupee and risk-off sentiments following rate hikes by the central bankers.
- In the first five months of the ongoing calendar, the overseas investors have pulled out Rs 1.62 lakh crore from the local share markets.
- The selling pressure has continued in the month of June as well with FPIs selling equities in all sessions.
Q) Which is the fastest stock exchange in the world?
- London stock exchange
- New York stock exchange
- American stock exchange
- Bombay stock exchange
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