Fears of a rate hike by the US Federal Reserve following positive jobs data in February saw investors selling stocks in emerging markets, including India.
As a result, the Nifty closed at 8,757, down 2.03 per cent (181 points) while the Sensex lost 2.05 per cent (604 points) to close at 28,845. This is the biggest drop over the last two months.
“Markets were weak today largely on the back of concerns over the US interest rate hike. There are concerns over liquidity flows into India and other emerging markets when the US actually (chooses to) increase interest rates,” said Dipen Shah, Head of PCG (Private Client Group) Research, Kotak Securities.
Weakness in the rupee, which fell to 62.58 intra-day on forex markets, weighed on sentiments.
Selling was seen from retail investors, who were net sellers of equities worth ₹1,024 crore and did a turnover of about ₹4,100 crore. FIIs were net buyers of equities worth ₹838 crore, with a turnover of about ₹10,670 crore. Domestic institutionaló investors also were net sellers to the tune of ₹35 crore and saw a turnover of about ₹3,000 crore.
All the broader/sectoral indices, barring CNX Pharma, closed in the red. Volatility was high with volatility index India Vix closing 9.52 per cent higher at 15.8125.