Sensex plunges more than 1,200 points on global markets carnage
Mumbai: Benchmark equity index Sensex slumped more than 1,200 points on Tuesday, tracking a huge selloff in world equities after Wall Street logged record decline overnight.
On Monday, the Dow Jones Industrial Average fell nearly 1,600 points during the session, its biggest intraday decline in history, on fears quickening inflation may lead to higher rates by the US Federal Reserve.
Elsewhere in Asia, Japan’s Nikkei was down 5.4%, while China’s Shanghai Composite Index shed 4.7%.
In intraday trade, Sensex slumped nearly 1,274.35 points to 33,482.81 points, while Nifty declined 371.40 points to 10,295.15. Both Nifty and Sensex fell nearly 3.5%, their biggest fall since August 2015.
At 10.18am, Sensex was trading at 33,573.99, down 3.4% or 1,183.17 points, while Nifty fell 3.4% to 10,307.60 points.
Among sectoral indices, BSE Realty was the top loser, down 4.1%, followed by BSE Bankex and Metal indices, which fell 3.1% each.
All the 30 Sensex stocks were trading lower. Tata Motors Ltd cracked nearly 10% after it reported lower-than-expected earnings due to weak performance by Jaguar Land Rover (JLR).
Other major losers were in the banking sector. Yes Bank Ltd slumped 4.3%, Axis Bank 4.2%, while ICICI Bank Ltd fell 3.5%.
“Indian markets are mirroring the freefall in world equities. The fear of inflation firming up, and hardening bond yields led to increase in US VIX and send the US market spiralling down, with momentum strategies adding to the domino effect ,” said Ritesh Jain, chief investment officer at BNP Paribas Mutual Fund.
“We have turned completely from greed to fear and, hopefully, the fear should settle down without any systemic damage. It’s a wait and watch situation until then,” added Jain.
A total of over Rs12.50 trillion worth of investments got wiped off in the last six trading sessions, its longest losing streak in four months, tracking global selloff amid strong US jobs data.
According to BSE data, market capitalisation of all listed BSE companies stood at Rs142 trillion on Tuesday, which was lower than Rs155 trillion as on 30 January.
During the six-day losing streak, benchmark Sensex index declined nearly 7% or 2,529 points, while the Nifty index slumped over 6.3% or 765 points.
US stocks plunged in highly volatile trading.
Indian markets are already under pressure after the government presented the budget on 1 February that focused on populist measures ahead of general elections in 2019 and imposed a long-term capital gains tax on equities.
Traders will also keep an eye on the Reserve Bank of India’s (RBI) interest rate decision on 7 February. Analysts expect the RBI to keep interest rates on hold on expectations that inflation may accelerate further due to higher crude oil prices and a proposed hike in minimum support prices (MSP) 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.
Analysts said breaching its fiscal deficit target for fiscal year 2017 and revising upward its deficit target for the next fiscal could prompt RBI to change its policy stance in the near future.
On 1 February the government informed that it breached its fiscal deficit target to 3.5% from the earlier target of 3.2% and revised its deficit target to 3.3% from 3% earlier for FY18.
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