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MUMBAI : Indian stocks fell for the third straight day on Thursday, setting the benchmark indices on course for their worst weekly performance in more than a month, as soaring crude prices and fears of a US interest rate hike weighed on investor sentiment.

On Thursday, the benchmark indices Sensex and Nifty slid 1.06% and 1.01% to hit 59,464.62 and 17,757, respectively. The BSE Sensex is down 2.87% so far this week, while the National Stock Exchange’s Nifty index fell 2.73%. The indices are headed for their worst weekly performance since the week of 13 December, when they declined 3%.

Investor jitters
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Investor jitters

The three-day losing streak has erased investor wealth by about 6.8 trillion.“Domestic equities closed lower following weak global indications due to the possibility of the Fed raising interest rates in the near term. Nifty fell 1% while the broader markets outperformed the main indices, with the Nifty Midcap and SmallCap declining 0.16% and 0.05%, respectively," said Mitul Shah, head of research at Reliance Securities.

Most sectoral indices ended lower except Nifty Metal (+0.52%) and Nifty Realty (+0.23%). Nifty Pharma declined the most at 1.66%, followed by Nifty FMCG (-1.15%) and Nifty IT (-1.01%).

“US equities ended sharply lower after a diverse set of corporate earnings. The market continued to worry about higher US Treasury yields and the Fed tightening monetary policy. The 10-year Treasury yield hit a high of 1.9%. Investors are looking to next week’s Fed policy meeting for more clarity on central bankers’ plans to rein in inflation. Data last week showed US consumer prices increased solidly in December," Shah added.

The concerns over rising inflation, bond yields and Fed’s moves have also prompted foreign institutional investors to pull money out of markets such as India.

“Persistent concern over global inflation and a likely Fed rate hike acted as major headwinds for the domestic market to tumble for the third day. High volatility due to rising bond yields is pressuring foreign investors to pull out. As the recent earnings failed to excite the market, the ongoing global volatility drained investor confidence," said Vinod Nair, head of research, Geojit Financial Services.

FIIs have sold Indian equities worth $651.1 million or 4,831.25 crore net so far in January, while domestic institutional investors have bought equities worth 6,391.73 crore so far, Bloomberg data shows.

Brent crude prices have hit a seven-year high after a drone attack on oil tankers of the Abu Dhabi National Oil Co (Adnoc) on Monday, stoking inflation concerns. Brent crude climbed to $88.02 a barrel on Thursday, an increase of 0.41%.

Experts expect volatility to continue in the run-up to the budget and several state polls.

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