The Sensex and the Nifty50 tumbled up to 2.5 percent in early deals amid a broad-based sell-off, mirroring the sea of red across global markets following the Fed Chair's more-hawkish-than-expected tone at his Jackson Hole speech.
Indian equity benchmarks suffered their steepest fall in percentage terms since mid-June amid a global sell-off, as Fed Chair Jerome Powell sounded more hawkish than many had anticipated at the annual Jackson Hole symposium last week. Losses across sectors pulled the headline indices lower, with financial, IT, oil & gas and metal shares being the biggest contributors.
The Sensex tanked as much as 1,466.4 points or 2.5 percent to 57,367.5 in the first few minutes of trade — its biggest single-day fall in both percentage and absolute terms since June 13 — and the Nifty50 slid to as low as 17,166.2, down 392.7 points or 2.2 percent from its previous close — its steepest percentage fall since June 16.
All of the 50 stocks in the Nifty basket were deep in the red at the open.
SBI Life, Bajaj Finance, Shree Cement, Tata Steel and Tata Motors — falling around three percent each — were also among the top blue-chip laggards.
"Markets had expected Jerome Powell to remain hawkish at Jackson Hole but his ultra-hawkish tone was not factored in by the markets. The 17 percent rally in the S&P 500 from mid-June to mid-August was mainly driven by expectation that with declining inflation, the Fed would pivot towards lower interest rates by early 2023," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The rupee hit a record low of 80.08 against the US dollar, breaching the 80 mark on the downside for the first time since July 21.
"The sharp rise in the dollar index and the 10-year US bond yield are negative for capital flows to emerging markets like India. FPIs are unlikely to continue buying in India in this scenario," Vijayakumar said.
Overall market breadth remained in favour of the bears throughout morning deals, as 925 stocks rose and 2,152 fell on BSE.
Equities in other Asian markets began the week deep in the red following a 3-4 percent plunge in Wall Street indices on Friday after the Fed Chair's Jackson Hole address dashed nascent hopes for a more modest path of policy tightening.
MSCI's broadest index of Asia Pacific shares outside Japan was down 1.5 percent at the last count. Japan's Nikkei 225 was down 2.8 percent.
S&P 500 futures were down one percent, indicating more pain ahead on Wall Street.