Home >Market >Stock-market-news >5 reasons why Sensex, Nifty fell over 1% today

Mumbai: Indian shares dived nearly 2% today following weak global cues amid cautiousness ahead of 2019 Lok Sabha elections next year. Share markets across the world faced selling pressure after the US Federal Reserve this week hinted at more rate hikes. In India, traders worry that the government could announce populist schemes ahead of the general elections. The Sensex closed at 35,742.07, down 689.60 points, or 1.89%. The Nifty 50 ended 197.70 points, or 1.81%, lower at 10,754. The rupee fell below the 70 to a dollar level by plunging 0.8% from its previous close of 69.7.

Global route

The selloff across equity markets continued, with stocks in Europe and Asia declining over weak growth outlook for the global economy and further rate hikes by the Fed. European shares opened in negative territory, following in the footsteps of US and Asian markets. Most European bourses and industry indexes were in the red after the S&P 500 fell overnight.

Fed rate hike path

The Fed raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth. Although largely in line with expectations, the decision did little to soothe investor concerns over slowing world growth, US trade tensions with China, and tightening monetary conditions for companies in the world’s biggest economy.

2019 Lok Sabha elections

Traders in India are cautious that the government might announce more populist measures to woo voters ahead of the 2019 general elections. The government had exceeded its budgeted deficit in October, and populist announcements such as farm loan waivers and tax cuts may lead to fiscal slippage, analysts expect.

Falling crude oil prices

Oil prices fell 10% in a week as investors drew breath ahead of the long festive break. Crude oil has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. Further concerns were raised as the US, the world’s biggest oil consumer, may have a government shutdown later on Friday.

US political developments

The prospects of a government shutdown int the world’s largest economy hurt US stocks and weighed on global markets. President Donald Trump and congressional Democrats remained far apart on a stopgap funding bill held up by discord over money for a border wall. If they do not, key agencies will close and many workers will be furloughed right before Christmas without a paycheck. The sense of turmoil was compounded by a falling stock market and Trump’s abrupt decision to disregard advisers and allies and pull out of Syria and sharply reduce US troop presence in Afghanistan.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout