Red Alert! HDFC Bank, RIL drag Sensex over 600 points lower, Nifty slips below 20,000
As US bond yields hit a 16-year high ahead of the US Fed meet outcome, domestic benchmark indices opened in the red on Wednesday, dragged by index heavyweights HDFC Bank, Reliance Industries, and Infosys.
The BSE Sensex was trading 570 points or 0.85% lower at 67,023. Nifty50 was trading at 19,971, down 161 points or 0.81% at around 10.36 a.m.
From the Sensex pack, HDFC Bank, Tech Mahindra, Tata Steel, Bharti Airtel, and Infosys opened with losses, while ICICI Bank, Power Grid, L&T, IndusInd Bank, Axis Bank opened with gains.
HDFC Bank opened nearly 3% lower after the bank on Monday said its gross non-performing assets will likely increase as of July 1, after its merger with HDFC.
Shares of Bharat Dynamics opened 3% higher after the company signed a contract worth Rs 291 crore with IAF.
Sector-wise, Nifty Financial Services declined 0.87% and Nifty Bank fell 0.68%. FMCG, IT, pharma, realty, and healthcare sectors also opened lower. In the broader market, Nifty Midcap100 gained 0.05%, while Smallcap100 opened flat.
“There are too many challenges for the market in the near-term. Brent crude at $94, the dollar index above 105, the 2-yr US bond yield at 5.09 percent and the INR at record lows against the dollar are strong headwinds,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.”To add to these headwinds, now there is the disappointing news of the likely compression of NIMs of HDFC Bank, which might temporarily impact sentiments in Bank Nifty,” Vijayakumar added.
Deepak Jasani, Head of Retail Research at HDFC Securities, said, “A move below 19865 could lead to acceleration in decline for the Nifty.”
Asian stocks struggled for headway on Wednesday while 10-year US Treasury yields stood at 16-year highs as surging oil prices drive inflation and set the scene for the Federal Reserve to project interest rates staying higher for longer.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, as did Japan’s Nikkei. Overnight on Wall Street the S&P 500 also slipped 0.2%.
US Treasury yields hit 16 years high
US Treasury yields hit a 16-year high ahead of the conclusion of the Federal Reserve’s policy meeting on Wednesday, at which the Fed is expected to hold rates steady, but may indicate its willingness to keep monetary policy tighter for longer.
Benchmark 10-year Treasury yields hit their highest level since 2007 at 4.371% overnight and were last at 4.36%.