Mumbai: Indian stock markets fell more than 1% on Friday, dragged down by heavyweights and financials amid indications that the US Federal Reserve may step up the pace of policy reversal.
The benchmark Sensex was currently down 0.8% to 51,930 points, while Nifty was down 1% to 15,560 points.
With cases of covid falling around the world and the economy opening up in many countries, the Fed has indicated it will begin to reverse its easy money policy at a faster pace than expected.
The indication of a slight hawkish policy at the last FOMC meeting weighed on sentiment, although it was widely anticipated, said Binod Modi, head of strategy at Reliance Securities.
“The hawkish tone of the US Fed did not appeal to equity investors around the world, and we could see the overhang for a session or two. Going forward, the focus would again be on fundamentals and national factors, namely the pace of the vaccination campaign, reopening by states, etc. In the meantime, we reiterate our advice to keep a check on the open leverage positions and to let the markets stabilize ”, a said Ajit Mishra, vice president – Research, Religare Broking.
Analysts said the improvement of more than 100% in withholding taxes / direct taxes in the first quarter of FY22 is so far positive for the markets, as it indicates sustainable corporate profits in the coming quarters as well as solid financial resources enabling the government to maintain the budgeted budget deficit. In addition, the ease of state trade restrictions, driven by a sharp drop in Covid-19 positivity rates and a reduction in the number of daily cases, continues to comfort investors, analysts added.
Investors will monitor the progress of the daily case count, the ramp-up of vaccination and the near-term monsoon progress for a new direction.
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