India equity losses mount on fears of rising rates

Losses on Indian shares continued to mount on Thursday as investors continued to fret over the likelihood that global central banks would have to keep raising interest rates to tackle inflation.

Volatility remained high with the expiration of the February derivatives series.

The Nifty 50 index closed 0.25 per cent lower to 17,511.25, while the S&P BSE Sensex fell 0.23 per cent to 59,605.80. Both the benchmarks traded in a range between 0.4 per cent gains and 0.6 per cent losses. According to estimates, investors have lost around Rs6.97 trillion till Wednesday, when the Sensex shed 927.74 points, or 1.53 per cent.

The volatility index settled at 15.08, hovering near a three-week high. Also known as the fear gauge, it had risen to 15.59 on Wednesday, highest since February 2, the day after the union budget.

Twenty-six of the Nifty 50 stocks declined, with Asian Paints losing over 3 per cent after Jefferies flagged demand-related concerns over demand after the recent price hikes.

Larsen & Toubro, Titan and Divi’s Laboratories (DIVI.NS) were among the other top losers.

A majority of the RBI’s policy committee members reiterated that it would be premature to lower the guard against inflation. “Only value stocks are likely to do well, in the near term,” said Anita Gandhi, director at Arihant Capital Markets.

Analysts had anticipated high volatility in Thursday’s session ahead of the February series derivatives expiry.

The US Federal Reserve’s latest minutes indicated that a majority of the members favoured smaller rate hikes in subsequent meetings.

However, markets declined as a slew of macroeconomic data since then have kept fears of an aggressive rate hike path intact.

Zee Entertainment tumbled nearly 4 per cent after the National Company Law Tribunal admitted the company to corporate insolvency resolution process, in a petition filed by IndusInd Bank.

The media index fell 1.77 per cent and was among the top sectoral losers.

Consumer major ITC rose to an all-time high as analysts hinted at a potential growth in volumes due to a stable tax regime.

• Business