Business
Sensex crashes 1,093 points; Nifty settles at 17,531: Top reasons behind market fall
NEW DELHI: Equity indices plunged for the third straight session on Friday with the benchmark BSE sensex crashing nearly 1,100 points amid heavy selloff across all sectors.
The 30-share BSE index fell tanked 1,093.22 points or 1.82 per cent to settle at 58,840.79. During the day, it tumbled 1,246.84 points or 2 per cent to 58,687.17.
The NSE Nifty declined 346.55 points or 1.94 per cent to close at 17,530.85.
Tech Mahindra and UltraTech Cement fell over 4 per cent each, emerging as the major laggards. Infosys, M&M, Wipro, TCS and Nestle India were the other top losers on BSE.
While, IndusInd Bank was the only stock to finish in green on the BSE sensex.
On the NSE platform, all sub-indices finished in red with Nifty Media, IT, Realty and Auto being the major drags.
On a weekly basis, the Sensex shed 952.35 points or 1.59 per cent, while the Nifty fell 302.50 points or 1.69 per cent.
Here are the top reasons behind today’s crash:
* IT, auto stocks tumble
Markets were mainly dragged by a sharp fall in technology and automobile stocks following a broader global selloff over recession worries.
The Nifty IT index logged a weekly decline of 7%, its biggest since mid-June. The Nifty automobile index declined 2.7% on Friday.
Among heavyweights on the Nifty 50 index, automakers Mahindra and Mahindra Ltd, Tata Motors Ltd and IT services majors Tata Consultancy Services Ltd and Infosys Ltd fell over 3% each.
“The IT sector is pretty much mirroring declines in the U.S. market and the U.S. tech index and this signals the continuation of a downtrend. I think over the next week because we are heading into the Federal Reserve meeting, global markets would remain under pressure,” said Rohit Srivastava, founder and market strategist at Indiacharts.
The domestic IT industry takes a direct hit from rate hikes in the US and Europe as economic activity in those regions, where the tech sector gets most of its revenue from, could slowdown and that is the risk investors are considering, Srivastava added.
* Lowered growth projections
After a lower than expected GDP data for Q1 of FY23, rating agency Fitch earlier this week cut India’s gross domestic product growth forecast for the current fiscal year to 7% from 7.8%, citing a slowdown triggered by global economic stress, elevated inflation and tighter monetary policy.
Meanwhile, Moody’s Investors Service expects India’s GDP growth to slow from 8.3% in 2021 to 7.7% in 2022 and to decelerate further to 5.2% in 2023. In March, Moody’s had forecast that India’s economy could expand at 8.8% in 2022.
Citigroup has sharply cut its FY23 growth projection to 6.7% from 8% earlier while Goldman Sachs revised it to 7% from 7.2%.
SBI expects 6.8% growth from April 2022 to March 2023 (FY23) and India Ratings and Research (Ind-Ra) pegs it at 6.9%.
* Global markets fall
Stock markets mostly slumped Friday, while the British pound tanked to a 37-year dollar low as weak UK retail sales stoked global recession fears.
Asian equities also dropped Friday, tracking Wall Street losses as investors express concern over persistently high consumer prices and the increasing likelihood of further interest rate hikes.
The Fed and Bank of England are widely expected to ramp up borrowing costs next week.
The US central bank has lifted borrowing costs by 75 basis points at each of its last two meetings.
Asian investors meanwhile shrugged off brighter data from powerhouse economy China.
* Fed rate hike fears continue
Higher-than-expected US inflation data in August has dashed hopes that the Federal Reserve might ease away from more interest rate hikes.
Traders worry aggressive interest rate hikes by the Federal Reserve and central banks in Europe and Asia to control price rises might derail global economic growth. Two of the Fed’s rate hikes this year have been by 0.75 percentage points, triple its usual margin, and traders expect a similar increase this month.
Fed chair Jerome Powell said in August that rates would stay elevated for some time until the US central bank is sure inflation is under control.
* Worst week for rupee
The Indian rupee marked its worst week in five on Friday, as risk sentiment was hit by the Chinese yuan weakening past 7 per dollar to breach a key psychological level for the first time in two years.
The partially convertible rupee closed down 0.1% at 79.74 per dollar, recouping some of the day’s losses when it had hit an over one-week low. For the week, the rupee declined 0.2%, its biggest loss since the week ended August 12.
A foreign exchange trader said market participants were wary that the rupee had not been allowed to weaken past 80 per dollar and saw it as a level to protect.
(With inputs from agencies)
The 30-share BSE index fell tanked 1,093.22 points or 1.82 per cent to settle at 58,840.79. During the day, it tumbled 1,246.84 points or 2 per cent to 58,687.17.
The NSE Nifty declined 346.55 points or 1.94 per cent to close at 17,530.85.
Tech Mahindra and UltraTech Cement fell over 4 per cent each, emerging as the major laggards. Infosys, M&M, Wipro, TCS and Nestle India were the other top losers on BSE.
While, IndusInd Bank was the only stock to finish in green on the BSE sensex.
On the NSE platform, all sub-indices finished in red with Nifty Media, IT, Realty and Auto being the major drags.
On a weekly basis, the Sensex shed 952.35 points or 1.59 per cent, while the Nifty fell 302.50 points or 1.69 per cent.
Here are the top reasons behind today’s crash:
* IT, auto stocks tumble
Markets were mainly dragged by a sharp fall in technology and automobile stocks following a broader global selloff over recession worries.
The Nifty IT index logged a weekly decline of 7%, its biggest since mid-June. The Nifty automobile index declined 2.7% on Friday.
Among heavyweights on the Nifty 50 index, automakers Mahindra and Mahindra Ltd, Tata Motors Ltd and IT services majors Tata Consultancy Services Ltd and Infosys Ltd fell over 3% each.
“The IT sector is pretty much mirroring declines in the U.S. market and the U.S. tech index and this signals the continuation of a downtrend. I think over the next week because we are heading into the Federal Reserve meeting, global markets would remain under pressure,” said Rohit Srivastava, founder and market strategist at Indiacharts.
The domestic IT industry takes a direct hit from rate hikes in the US and Europe as economic activity in those regions, where the tech sector gets most of its revenue from, could slowdown and that is the risk investors are considering, Srivastava added.
* Lowered growth projections
After a lower than expected GDP data for Q1 of FY23, rating agency Fitch earlier this week cut India’s gross domestic product growth forecast for the current fiscal year to 7% from 7.8%, citing a slowdown triggered by global economic stress, elevated inflation and tighter monetary policy.
Meanwhile, Moody’s Investors Service expects India’s GDP growth to slow from 8.3% in 2021 to 7.7% in 2022 and to decelerate further to 5.2% in 2023. In March, Moody’s had forecast that India’s economy could expand at 8.8% in 2022.
Citigroup has sharply cut its FY23 growth projection to 6.7% from 8% earlier while Goldman Sachs revised it to 7% from 7.2%.
SBI expects 6.8% growth from April 2022 to March 2023 (FY23) and India Ratings and Research (Ind-Ra) pegs it at 6.9%.
* Global markets fall
Stock markets mostly slumped Friday, while the British pound tanked to a 37-year dollar low as weak UK retail sales stoked global recession fears.
Asian equities also dropped Friday, tracking Wall Street losses as investors express concern over persistently high consumer prices and the increasing likelihood of further interest rate hikes.
The Fed and Bank of England are widely expected to ramp up borrowing costs next week.
The US central bank has lifted borrowing costs by 75 basis points at each of its last two meetings.
Asian investors meanwhile shrugged off brighter data from powerhouse economy China.
* Fed rate hike fears continue
Higher-than-expected US inflation data in August has dashed hopes that the Federal Reserve might ease away from more interest rate hikes.
Traders worry aggressive interest rate hikes by the Federal Reserve and central banks in Europe and Asia to control price rises might derail global economic growth. Two of the Fed’s rate hikes this year have been by 0.75 percentage points, triple its usual margin, and traders expect a similar increase this month.
Fed chair Jerome Powell said in August that rates would stay elevated for some time until the US central bank is sure inflation is under control.
* Worst week for rupee
The Indian rupee marked its worst week in five on Friday, as risk sentiment was hit by the Chinese yuan weakening past 7 per dollar to breach a key psychological level for the first time in two years.
The partially convertible rupee closed down 0.1% at 79.74 per dollar, recouping some of the day’s losses when it had hit an over one-week low. For the week, the rupee declined 0.2%, its biggest loss since the week ended August 12.
A foreign exchange trader said market participants were wary that the rupee had not been allowed to weaken past 80 per dollar and saw it as a level to protect.
(With inputs from agencies)
