Indian shares on Thursday ended lower and clocked their worst quarter since the early days of the pandemic, beset by fears that aggressive central bank policy aimed at curbing inflation could hurt the economy, Reuters reported.
The Nifty 50 index fell 0.12% to 15,780.25, while the S&P BSE Sensex fell 0.02% to 53,018.94.The rupee ended at a record closing low of 78.9675 against the dollar.
The indexes fell around 9.5% each in the quarter, their worst performance since the March quarter of 2020. Foreign investors sold Indian equities worth $13.81 billion in the quarter till June 29, the biggest outflow since at least 2008.
In the June month alone, the Nifty dropped 5.99%. Since the beginning of the year, the index has dropped approximately 1,845 points, falling to 15,780 from 17,638.
Further, the Nifty bank index has dropped 20% from its 52-week high of 41,829.60. It has lost 8.85% in the quarter.
The Nifty Metal index was the worst performer during the quarter, plunging 27.80%, including a 2% slide on Thursday. Since the announcement of the increase in export duties on steel, the Nifty Metal index fell 18%, or 1058 points, from 5,706 to 4648.05 (as of June 30).
The Nifty Smallcap 100 and the Nifty Midcap 100 lost 19.1% and 10.9%, respectively, in the quarter.
Meanwhile, the Nifty Auto index jumped nearly 11% in the quarter on the back of softening commodity prices (steel and aluminium) and better Kharif expectations.
The Reserve Bank of India has hiked interest rates twice in the last quarter—once out of cycle. More hikes are expected with inflation above the central bank's tolerance band for a fifth straight month in May, as crude oil and commodity prices surged following the Ukraine conflict.
"As seen in past interest rate cycles, we may see markets take 6-8 months to stabilise from their first-rate hike and one year to gain back all their losses," said Gaurav Dua, head of capital market strategy at Sharekhan, adding that small-cap stocks could see an extended period of pain.
"The next quarter won't be easy. We will likely see companies report the full effect of input cost pressures in their earnings."
