Sensex continues on southward trip on US rate-cut fears
Mumbai: Despite finance minister, Yashwant Sinha's, comments that foreign funds inflows would not be seriously impacted, key share indices slumped Friday over continued foreign fund sales and expectations of further hikes in US interest rates.

The Bombay Stock Exchange (BSE) Sensex closed at 4068.84, down 123.60 points or 2.95 per cent from its Thursday close. The National Stock Exchange (NSE) S&P CNX Nifty provisionally closed at 1268.00, down 25.40 points or 1.95 per cent from its Thursday close.

However, late evening short-covering and some speculative buying by some short-term players at the close of the BSE's weekly account helped the key share indexes partially trimmed losses in the last few minutes of trade.

With the US interest rates rising, foreign funds have been selling in the Indian market for most of May with net outflows up to May 15 at $8 million compared with inflows of $617.2 million in April.

The US Federal Reserve on Tuesday hiked the key federal funds rate target by 50 basis points to 6.5 per cent. The federal fund rate is now at its highest since January 1991 when it stood at 6.75 per cent.

Major equity markets are still reeling under a sharp correction in technology stocks which began in March. And with no leads to buy, dealers felt the near term prospects for the equities market was even more bleak.
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