Sensex crashes 1,158 points; Nifty ends at 15,808: Top reasons behind today's fall
NEW DELHI: Equity indices plunged for the 5th straight session on Thursday with the benchmark BSE sensex crashing over 1,000 points amid weak cues from global markets.
According to experts, investors remained cautious ahead of announcement of inflation rate for April and industrial production data for March.
The 30-share BSE sensex plunged 1,158 points or 2.14 per cent to close at 52,930. While, the broader NSE Nifty settled 359 points or 2.22 per cent lower at 15,808.
IndusInd Bank, Tata Steel, Bajaj Finance, Bajaj Finserv and Axis Bank were the top losers in the sensex pack falling as much as 5.82 per cent. Twenty-nine out of 30 stocks finished in red.
Wipro was the only stock which finished in green.
On the NSE platform too, all sub-indices finished in red with Nifty PSU Bank, Metal, Private Bank and Financial Services falling up to 5.39 per cent.
Here are the top reasons for today's fall:
* Concerns over inflation
Investors became jittery after US consumer price data came in at 8.3 per cent for the month of April. Although the numbers were marginally lower than 8.5 per cent in March, it is still significantly high.
The data suggest the consumer price index, or CPI, may be peaking and set to ease further, but the decline was smaller than hoped for and it reinforced expectations that the Federal Reserve will continue to raise interest rates to counter rising prices.
In India too, inflation has pushed up food index to multi-month high in March and is expected to remain elevated due to higher vegetable and cooking oil prices.
"Undoubtedly, the biggest negative catalyst continues to be inflation all over global economies. The anxiety at stock markets across globe is on the backdrop Federal Reserve's next strategy on interest rates...," said Prashanth Tapse, Vice President (Research), Mehta Equities.
* Expectations of rate hike
According to Economists, the inflation report will keep the Fed on track for rapid and potentially sharp increases in interest rates in upcoming months.
To corral high inflation, the Fed has already pulled its key short-term interest rate off its record low near zero, where it spent most of the pandemic. It also said it may continue to hike rates by double the usual amount at upcoming meetings.
Similarly, the Reserve Bank of India (RBI) made a surprise rate hike earlier this month, after keeping it at the same level for nearly 2 years. The objective was to tame inflation that jumped to 17-month high in March.
Data for April, to be released later in the day, is also expected to remain elevated.
RBI is also likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes.
Rate hike by RBI will be followed by corresponding hikes in interest rates on loans by banks, thereby pushing up EMIs for households.
* FIIs continue to sell
Foreign investors have been net sellers in the domestic equity markers since the past 7 months now. Heavy bouts of selling by the foreign investors are usually a sign of weakening of the rupee against the dollar.
In 6 trading sessions so far this month, FIIs have withdrawn over Rs 20,000 crore from Indian stock markets.
Since October last year, FIIs have withdrawn over Rs 2.92 lakh crore from the markets. This is the 8th straight month when foreign investors are selling Indian shares.
* Global markets fall
Stock markets fell across countries after US futures and oil prices fell.
In Frankfurt, the DAX fell 1.8 per cent to 13,578.21 while the CAC 40 in Paris lost 1.9 per cent to 6,150.85. Britain's FTSE 100 lost 2per cent to 7,200.33. The future for the S&P 500 was 0.2 per cent lower while that for the Dow industrials lost 0.1 per cent.
Hong Kong’s benchmark fell 2.2 per cent to 19,380.34 following the arrests of several prominent democracy advocates, including a retired Roman Catholic cardinal.
her Asian trading, Tokyo’s Nikkei 225 gave up 1.8 per cent to 25,748.72.
The Shanghai Composite index shed 0.1 per cent to 3,054.99. Australia’s S&P/ASX 200 lost 1.8 per cent to 6,941.00. South Korea’s Kospi slipped 1.6 per cent to 2,550.08.
on Wall Street, the S&P 500 fell 1.6 per cent, wiping out gains from a day before. The Dow Jones Industrial Average dropped 1 per cent and the Nasdaq fell 3.2 per cent as tech stocks weighed down the broader market. The three major indexes are each on pace for another sharp weekly loss.
Meanwhile, the plunge in stock markets are having a spillover effect on other segments as well.
In India, the rupee rupee plunged to a record low for a second time this week, hitting 77.63 against the dollar. It settled at 77.5025.
Besides, Bitcoin fell to its lowest in 16 months on Thursday, leading a rush out of risk assets, such as tech stocks, while the collapse of TerraUSD, a so-called stablecoin, underscored the strain on cryptocurrency markets.
Bitcoin, the world's largest cryptocurrency, dropped 3 per cent to $27,584, after hitting its lowest since December 2020. It has lost a third of its value in the last eight sessions.
(With inputs from agencies)