Sensex slumps on US Federal rate bump

Mumbai: A sense of nervousness gripped stocks on Thursday as the Sensex dropped 84 points to close at 26,519 trying to figure out the impact of US interest rate hike on India and other emerging markets amid feelers that more are on the cards.

This sent the rupee steeply lower by 40 paise to 67.83 against the dollar, which fed the nervous cycle. The session saw strong spells of volatility amid sustained foreign funds outflows.

The quarter percentage point rate increase — the first this year — was a virtual certainty although investors were caught off-guard after the Federal Reserve indicated that the pace of the tightening will be quicker in 2017.

The 30-share barometer started on a negative note, fell further but somewhat recovered to end at 26,519.07, down 83.77 points, or 0.31 per cent. It moved between a low of 26,407.58 and a high of 26,737.86. The gauge had lost 95 points in the previous session.

The NSE Nifty fell 28.85 points, or 0.35 per cent, at 8,153.60. Intra-day, it hovered between 8,121.95 and 8,225.90.

“The Fed rate hike was in the ballpark, but the outlook is hawkish with three hikes in 2017 against previous estimate of two, which has put pressure on domestic market and rupee,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.