Sensex, Nifty plunge today, investors lose Rs 3.8L cr: Key reasons behind the fall

Sensex, Nifty plunge today, investors lose Rs 3.8L cr: Key reasons behind the fall

Indian equity benchmarks on Wednesday fell sharply as the 30-share BSE Sensex pack slumped 587 points or 0.81 per cent to trade at 72,161 in late morning deals. The broader NSE Nifty index moved 186 points or 0.84 per cent down to 21,869-level. The correction in domestic benchmarks was due to weakness in consumer, IT and energy stocks. India VIX, fear index, rose 2.44 per cent to 14.24-level.

Such was the fall in the domestic bourses that around Rs 3.8 lakh crore of BSE market capitalisation (m-cap) was wiped out. Investor wealth, as suggested by the BSE m-cap, fell Rs 3.86 lakh crore to Rs 374.93 lakh crore compared with a valuation of Rs 378.79 lakh crore recorded in the previous session.

Frontline stocks such as Tata Consultancy Services Ltd (TCS), Reliance Industries Ltd (RIL), L&T, Infosys, HUL, ITC, Nestle India, HCLTech and Tata Motors contributed to the fall today.

Here are the key reasons behind the stock market fall:

Consumer, IT & energy stocks slump

All the 15 sector gauges — compiled by the NSE — were trading in the red today. Sub-indexes Nifty FMCG, Nifty Consumer Durables, Nifty IT and Nifty Oil & Gas were underperforming the NSE platform by falling as much as 1.39 per cent, 0.86 per cent, 1.92 per cent and 1.41 per cent.

TCS dropped about 3 per cent, the most on the Nifty, on Tata Sons’ plan to sell a $1.13 billion stake sale at a 3.7 per cent discount. The counter also weighed on the IT index (Nifty) whose 1.85 per cent slide was the most among the major sectors.

Global cues

The US rate-sensitive IT stocks have dropped 3.3 per cent this week as expectations of a Federal Reserve rate cut have receded due to recent hotter-than-expected inflation print.

Asian markets were also down ahead of the Fed decision, holding their losses even as the Bank of Japan ended eight years of negative interest rates.

“In the near-term, a change in the global market construct will happen if the Fed sends a hawkish message stronger than market expectations. This cannot be ruled out since the declining trend in US inflation has been arrested in the last two months. Investors may wait for clarity to emerge on the Fed response tomorrow,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

FII data

Foreign institutional investors (FIIs) sold Rs 2,051.09 crore worth of shares on a net basis during the previous session, while domestic institutional investors (DIIs) bought Rs 2,260.88 crore worth of shares, exchange data showed.

Nifty outlook

Nifty has been witnessing a range bound movement with support maintained strong at the 21,870 zone. A decisive close above 22,200 is necessary to improve the bias from current levels and thereafter anticipate for further rise to retest the previous peak. Immediate support is seen at 21,900 while the resistance would be at 22,000,” Prabhudas Lilladher stated.

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