Sensex Slumps Over 400 Points, Rupee Near 67/Dollar Amid US Rate-Hike Jitters

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Indian stocks and the rupee fell sharply today, amid growing expectations of a US interest rate hike later this year. The Sensex fell as much as 518 points before closing 439 points lower at 27,643. The Nifty slumped 135 points to settle at nearly two-month low of 8,573 points while the rupee fell 40 paise to close at 66.93 against US dollar.

Here are 10 updates: 

1) Minutes of the Fed’s September meeting showed the decision to keep rates on hold was a close call, with three members voting to raise. Odds of an increase in US borrowing costs by the end of the year remain around 68 per cent, according to Fed funds futures, up about six percentage points from a week ago. Track Your Stocks Here

2) “A rate hike by the Fed looks imminent,” Paras Bothra, vice president of equity research at Ashika Stock Broking said.

3) Analysts also say that the Fed rate outlook and the US elections are the short-term worries for Indian markets.

4) The rupee fell as much as 43 paise today to hit intraday low of 66.96/dollar.

5) Global funds have bought $7.8 billion of Indian shares this year, more than twice the $3.3 billion they invested in 2015.

6) A rate hike in the US could make dollar assets more attractive, thus impacting the fund flows into emerging markets.

7) The inflows have helped Indian equities rebound 20 per cent from low hit in February.

8) Investors are cautious ahead of the September-quarter results season. India’s biggest outsourcer TCSwill report its Q2 earnings later in the day. The stock closed 2 per cent lower.

9) Analysts don’t expect India Inc to report blockbuster earnings for the September quarter but some see an improvement over the previous quarter.

10) Despite expectations of an improvement in India Inc’s Q2 earnings performance, analysts have voiced concern over valuation. The Sensex is valued at 16.4 times projected 12-month earnings, while the MSCI Emerging Markets Index trades at a multiple of 12.3, data compiled by Bloomberg show.