Sensex declines for sixth straight session as global rout continues

The benchmark Sensex declined for the sixth straight session, its longest run of declines since June, as investor sentiment for risky assets remained weak amid mounting odds of a global recession.

Sustained selling by foreign portfolio investors (FPIs) amid soaring US bond yields and the dollar dampened investor mood. The benchmark Sensex fell 509 points, or 0.8 per cent, to end the session at 56,598, its lowest close since July 27.

The 30-share index has shed 3,121 points, or 5.2 per cent in the last six trading sessions. The Nifty50 index fell 149 points, or 0.9 per cent, to finish at 16,859. The index closed below its 20-day moving average (DMA) for the first time since July 29.

FPIs sold shares worth Rs 2,772 crore on Wednesday, taking the month-to-date investment tally into the negative territory after two months.

Since July, FPI flows had turned positive to boost domestic equity markets even as global peers flattened. However, the sharp fall in the rupee and attractive bond yields in the US has once again queered the pitch for the domestic markets.

The US 10-year bond yields topped 4 per cent during intraday trade, its highest level since the 2008 global financial crisis, but ended the session at 3.93 on Tuesday. Analysts said the US bond markets are signalling a recession and leading to investors pulling back from risky assets.

The aggressive monetary stance by the US Federal Reserve (Fed) has led to hardening of the yields and surge in the US dollar. The rupee hit a new low against the dollar to close 81.9. A weak rupee eats into the returns of overseas investors and weighs on incremental flows.

Hawkish comments by Fed officials did little to improve investor sentiment.On Tuesday, St. Louis Fed chief James Bullard stressed the need to raise interest rates to restore price stability. Bullard’s sentiments were echoed by Federal Reserve Bank of Minneapolis president Neel Kashkari who said the Fed’s current pace of interest-rate increases is appropriate.

Fed officials raised interest rates by 75 basis points in September for the third straight meeting, bringing the target for the benchmark federal funds rate to the 3-3.25 per cent range.

The market breadth was weak with 2,161 stocks declining and 1,277 advancing. Close to two-thirds of Sensex stocks declined.