Sensex dipped by 224.11 points or 0.37% to settle at 60,346.97. The benchmark touched the day's high of 60,649.04 and low of 59,417.12. The last time the 30-scrip index was over the 60,600 mark was in the first week of April this year.
In terms of sectoral indices, the BSE IT index was worst hit by plunging over 976 points. Tech giants like Infosys, TCS, Tech Mahindra, and HCL Tech emerged as top laggards with a downside between 2-4.5%. On the other hand, BSE Bankex surged by over 600 points, and the Metal index climbed more than 371 points.
Talking about the market's performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Although the opening hours of the domestic market mirrored the sharp sell-off in the global market, it steadily recovered as investors gained the confidence to bottom fish, thanks to the brighter prospects for the home economy."
Nair also added, "The expectation that the Fed would become less hawkish, which had spurred the most recent global rally, was dashed by worse than anticipated US inflation figures. Additionally, India’s easing WPI inflation numbers added more optimism with banking stocks leading the recovery, while the IT sector’s performance was bleak due to recession fears in western markets."
Following the above, the BSE market cap slipped to nearly ₹285.95 lakh crore by end of September 14 -- lower by ₹76,196.54 crore against the previous day's reading of over ₹286.71 lakh crore.
Reliance Industries continues to be the most valued stock with a market cap of nearly ₹17.51 lakh crore, followed by TCS with a valuation of nearly ₹11.42 lakh crore, and HDFC Bank with a cap of nearly ₹8.51 lakh crore.
Coming to Nifty 50, the benchmark closed at 18,003.75 lower by 66.30 points or 0.37%. The index had touched an intraday high and low of 18,091.55 and 17,771.15 respectively.
Ajit Mishra, VP - Research, Religare Broking said, "After the gap down start, the Nifty index gradually inched higher as the session progressed and retested Tuesday’s high however profit taking in the last hour pushed the index lower. It finally settled at 18,003.75 levels; down by 0.4%. Banking and metal put a good show among the sectoral pack while pressure in IT, energy, and realty remained under pressure."
Meanwhile, at the forex market, the Indian rupee settled at 79.47 per dollar -- down by 30 paise as the greenback strengthed after a higher-than-expected US CPI print.
As of September 14, this month, FPIs have invested ₹14,138 crore in the Indian equity market.
Going forward, Mishra said, "Markets are in strong hands and such a strong recovery amid the global mayhem has further strengthened our belief. We thus reiterate our view to maintain a positive bias however pick the sectors wisely. The IT pack is most vulnerable to the global decline while banking is just inches away from its record high. In short, use dips to buy strength and avoid weak pockets."
Investors will be focusing on RBI's monetary policy that is scheduled on September 30. Economists are expecting a 35-50 basis points hike from RBI in the upcoming policy due to stubborn multi-year high inflation.
Mitul Shah - Head of Research at Reliance Securities said, "RBI is expected to continue its hawkish stance and likely to raise interest rates by 50bps in its upcoming policy meet. Spill-overs from geopolitical shocks are causing considerable uncertainty to the inflation trajectory."
India reported a CPI inflation of 7% in August due to a spike in food prices. In July, the consumer price index stood at 6.71%. Inflation continues to stay above RBI's tolerance limit for the eighth consecutive month.
"India’s inflation is likely to remain at an elevated level in the near term due to higher energy prices (Oil and gas prices) and food prices, we expect it to cool down towards the end of FY23," Shah added.
Next week, the US Fed is likely to raise 75 basis points after the US inflation number for August at 8.3% -- which is higher than the expectation of 8%.
According to Shah, the US Federal Reserve reiterated the need to act strongly against inflation, leading markets to expect more interest rate hikes in the near future. India is trading premium valuations compared to emerging markets on high growth expectations. He added, "We expect the outperformance to continue given FII investment coupled with strong macros for India compared with other markets."
