Indian Indices Witnessing Sell Off; Nifty Even Dropped To 15,500 Levels: Here's Why

Indian benchmark indices saw a sharp fall for the second consecutive day but came off day's low with Nifty at 15649, while at day's low Nifty hit levels of 15513. Broader markets too were down proportionately with Nifty Midcap 100 down over 0.65% at the time of writing this copy. Meanwhile India VIX was up over 7% to 14.36 levels.

Indian Indices Witnessing Sell Off; Nifty Even Dropped To 15,500 Levels: Here's Why

1. Global cues weak:

There a host of events panning out, at one end investors and traders await the crucial Fed Reserve's outcome which will provide a guidance on the state of the world's most developed economy and the likely stance the Fed will take in respect of interest rates. Also, continued crackdown in China is also weighing, Asian markets are said to be trading at 2021 lows even though the markets there have taken a respite after the previous day's sharp fall. Asian markets were by and large trading mixed at the time of writing this copy. "China and the Fed are the two key things for today," said Tai Hui, chief market strategist for Asia Pacific, at JPMorgan (NYSE:JPM) Asset Management.

Fed's outcome is due at 1800 GMT followed by a conference by Chairman Powell.

2. Nifty pharma continues its downward slide:

As the Covid 19 situation in the country has eased somewhat and vaccination is another factor undermining the future prospects. Nonetheless, after tumbling by over 4% in the previous day's session, the index is still down 0.72%. Top laggards on the Nifty Pharma in today's trade include stocks like Dr. Reddys, Cipla, Cadila healthcare etc.

3. PSU Bank is another top drag:

After the previous day's gains on the index on the news of Vijay Mallya's bankruptcy, the index is the top loser with fall of close to 2%. The top loser being Maharashtra Bank, J&K Bank, Canara Bank, Punjab and Sind Bank and Bank of Baroda among others. The fall in the banking stocks is any way between 0.72-4.26%.

4. IMF slashes India's GDP forecast to 9.5% for FY22:

"Recovery has been set back severely in countries that experienced renewed waves-notably India. Growth prospects in India have been downgraded following the severe second covid wave during March-May and expected slow recovery in confidence from that setback," IMF said in the latest update to its bi-annual World Economic Outlook.

5. US dollar still higher:

US dollar is gaining as the risk-on sentiment has taken on after aggressive China crackdown. Last at the time of writing this copy, US dollar index at 3:17 am EDT as per marketwatch.com traded higher by 0.08% at 92.05.

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