Sensex dives 1,093 pts on fears of sharp rate hikes

Across the board selling since the start of trading on Friday pulled the sensex down to sub-59k level with 29 of the 30 index constituents closing in the red. Lower overnight closing in the US market, prospects of sharp hikes in rates by central banks across the globe to tame runaway inflation and strong selling by foreign funds unnerved Dalal Street investors.
As a result, the sensex closed 1,093 points down at 58,841, leaving investors poorer by Rs 6. 2 lakh crore. Friday’s 1,093-point loss was the biggest single-session drop for the sensex in three months.
According to market players, a combination of global and domestic factors led to the day’s sharp slide in the sensex. Fears of a sharp hike in rates by some of the major central banks around the world in the next few weeks to fight inflation was the main reason for nervousness among investors. In additionthey were also fearful about RBI going for another sharp hike in rates later in the month, as strong FPI selling led to weakness of the rupee. Selloff in IT stocks due to talks of a recession in the US also added to the sensex’s slide, market players said.

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The session started withthe sensex opening 350 points lower and lost steam through the day to close near the day’s low of 58,687 points. Reliance Industries, Infosys and HDFC Bank contributed the most to the day’s losses while IndusInd Bank was the only sensex constituent that closed in the green.

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