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Shares log worst week in six months on Fed rate fears, COVID worries

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BENGALURU — Indian shares posted their worst week in six months as robust U.S. economic data revived concerns of higher interest rate hikes, while a surge in COVID-19 infections in China also dampened risk appetite.

India’s benchmark Nifty 50 slipped below the 18,000 mark on Friday and closed down 1.77% at 17,806.80, lowest since Oct. 28.

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The S&P BSE Sensex fell 1.61% to 59,845.29, and closed below 60,000 for the first time since Oct. 28, marking the worst week for the Nifty and Sensex in six months. Both the indexes fell over 2.4% on a weekly basis.

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Wall Street fell sharply overnight after a resilient final estimate of third-quarter U.S. gross domestic product and other data fueled worries that the Federal Reserve would keep hiking interest rates for longer than feared.

Meanwhile, China is expecting a peak in COVID-19 infections within a week, a health official said, with authorities predicting extra strain on the country’s health system.

All the Indian sectoral indexes declined.

The pharma index has outperformed the markets this week, rising 1.17%, compared with a 2.53% fall for the Nifty.

However, analysts said it was unlikely there would be a repeat of the pharma rally seen during the previous waves of the pandemic.

“It’s unwise to chase pharma stocks just on hopes that they will do very well because COVID-19 is coming back,” said Neeraj Dewan, director, Quantum Securities. The “fear of the unknown” is not prevalent anymore, he added.

Metals fell the most, among major sectors, losing over 4.4% on Friday on COVID-19 concerns in China, the world’s largest consumer of steel.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Eileen Soreng, Saumyadeb Chakrabarty and Shounak Dasgupta)

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