Worries about interest rate increases in the US returned to haunt Dalal Street.Tracking the weakness in global markets, stocks saw their biggest sell off in over two months as strong US jobs data fanned expectations of an early rate hike by the US Federal Reserve and a flight of risk capital from emerging markets like India. The rupee fell to a two-month low against the dollar.
Bank shares were among the top losers amid concerns that higher US interest rates could prompt Reserve Bank to delay further monetary easing. Fund managers and brokers expect the weakness to stay in the near term as fears about interest rate hikes may linger till the Fed clarifies.
The BSE Sensex dropped 604 points, or 2.05%, to close at 28,844 on Monday. NSE's Nifty index dipped 181 points, or 2.03%, to end at 8,756. The rupee fell 37 paise to close at 62.54 against the US dollar.
On Friday, US announced its jobless rate dropped to 5.5% in February from 5.7% in January.
Also, employers in the US added 295,000 workers in February beating the forecast of 240,000.
If worries about interest rate hike in the US subside, the market could move in a narrow band, said brokers.
Elsewhere in Asia, markets ended in red while the European markets were trading weak.
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