Indian stock indices extend losses over weak global cues

New Delhi [India], February 23 (ANI): Benchmark stock indices extended their losses from the previous session as market sentiments remain subdued over global inflation and subsequent monetary policy actions by various central banks.

At 9.47 am, the Sensex and Nifty were 0.5 per cent lower each. On Wednesday, stocks in India declined tracking weak overnight cues from the US markets, which saw a heavy selloff. The key indices in the domestic market — BSE Sensex went down 927 points and settled at 59,744.98 level while NSE Nifty lost 280 points and closed the session at a 17,546.55 level.

“Yesterday’s sharp cut of 927 points on the Sensex was caused by a combination of factors: weak US cues, the continuing rout in Adani stocks and concerns of the Adani crisis impacting the banking system,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The shares of Adani Group companies have been consistently declining, though with varying degrees, after the January 24 report by a US-based short seller which leveled various allegations against the group.

“The US/global factor stems from concerns that the Fed will have to raise interest rates perhaps by 25bp thrice to weaken the economy and contain inflation. FOMC minutes reveal the fact that some have even argued for a 50 bp rate hike,” said Vijayakumar.

At the latest monetary policy meet, a few participants, according to the minutes of US Federal Reserve, favored raising the target range for the federal funds rate 50 basis points, noting that a larger increase would more quickly help in achieving price stability.

Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.