Market continues freefall, Sensex down over 500 points
Mumbai: The benchmark Sensex index plunged over 500 points on Monday tracking losses in global equities and as investor sentiment continued to be subdued post the introduction of long-term capital gains (LTCG) tax in the Union budget.
Strong US job data speculated that the US Federal Reserve may boost interest rates next month. The next US fed policy will start on 21 March. Higher bond yields were another reason.
At 9.25am, Sensex fell 1.5% or 531.61 points to 34,535.14, while 50-share Nifty index fell 1.45% or 156.30 points to 10,604.30. Year-to-date, Sensex and Nifty have risen 3.5% each.
“Weak world markets are bothering Indian market too. It is also a continuation of post budget blues,” said market analyst Ambareesh Baliga.
“Many of the retail investors in the market have been first-time investors in the last two years. This is the first time they are seeing losses and panic has set in,” Baliga added.
On Friday, US Labor Department data showed non-farm payrolls rise 200,000 in January, exceeding the median estimate of economists for a 180,000 increase as the jobless rate held at a near 17-year low of 4.1%.
On the domestic front, the Reserve Bank of India’s (RBI) interest rate decision on 7 February will also be closely watched. Analysts expect the RBI to keep interest rates on hold on expectations that inflation may accelerate further due to higher crude oil prices and proposed hike in minimum support prices for farmers.
Of the 15 economists surveyed by Mint, 14 expect the central bank to keep repo rate—the rate at which the central bank infuses liquidity in the banking system—unchanged at 6%. Only one expects a rate hike of 25 basis points.
The government breached its fiscal deficit target for fiscal year 2017 to 3.5% from the earlier target of 3.2% and revised upward its deficit target for next fiscal year to 3.3% from 3% earlier. So far this year, foreign investors bought $2.22 billion in equities and $1.67 billion in debt market.
PC Jeweller Ltd gained nearly 4% after it fell 60% on Friday in intraday trade on speculation that its promoter might have a business relationship with IT firm Vakrangee. Vakrangee hit another 10% lower circuit. The stock has plummeted over 45% in the last six sessions