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Sensex, Nifty tumble over 1% each. Key factors behind today’s market crash


Domestic equity indices closed in the red on Thursday, tracking a four-day fall in US stocks. Concerns over aggressive Fed rate hikes weighed heavily on investor sentiment globally. The double-digit rise in India’s GDP figures could not help propel the market higher.

The 30-share Sensex fell 770 points to end at 58,767. Its broader peer, Nifty50, declined 217 points to end at 17,543.

Reliance Industries (RIL) was the biggest loser from the 30-share pack, down 2.99 per cent to Rs 2,560.20. TCS fell 2.49 per cent, Sun Pharma was down 2.21 per cent and Tech Mahindra lost 2.15 per cent. Infosys, NTPC and HUL were among other Sensex stocks that settled with cuts.



On the other hand, Bajaj Finserv rose 2.58 per cent to Rs 17,404. Asian Paints rose 1.63 per cent, followed by Bharti Airtel, up 1.18 per cent, and Titan company, rising 0.93 per cent.

Earlier in the day, Asian markets settled lower. South Korea’s Kospi, Japan’s Nikkei and China’s Shanghai Composite fell 2.28 per cent, 1.53 per cent and 0.54 per cent, respectively.

The market capitalisation of all listed companies on BSE declined by Rs 1.42 lakh crore to Rs 278.8 lakh crore from Rs 280.21 lakh crore.

Sectorally, the Nifty IT index fell nearly 2 per cent, while Oil and Gas declined 1.82 per cent. Nifty Pharma and Financial Services also settled lower. However, Nifty Midcap50 rose 0.50 per cent while Nifty Smallcap50 fell 0.11 per cent.

Key factors behind today’s selloff:


US selloff

While the domestic market was closed on Wednesday on account of Ganesh Chaturthi, US stocks continued to tumble for the four session. On Thursday also, S&P500 futures were trading 0.70 per cent lower at 3,928 level, signalling another day of weak start for Wall Street stocks.

Tracking it, SGX Nifty futures were trading around 17,450 level earlier in the day against Nifty50’s closing of 17,759.30, hinting at huge gap-down opening for the NSE barometer.

Asian market cues

Asian shares were trading mostly lower on Thursday, tracking the broad slide on Wall Street, as investors braced for higher interest rates and inflation worries for some time. Benchmarks fell in Tokyo, Sydney, South Korea and Hong Kong in early trading, but edged up slightly in Shanghai.

Japan’s benchmark Nikkei 225 declined 1.5 per cent in morning trading to 27,673.14. Australia’s S&P/ASX 200 dropped 1.7 per cent to 6,865.60. South Korea’s Kospi shed 1.7 per cent to 2,429.75. Hong Kong’s Hang Seng lost nearly 0.8 per cent to 19,799.92, while the Shanghai Composite edged up 0.3 per cent to 3,212.96.

Factory activity

Asia’s factory activity slumped in August as China’s zero Covid curbs and cost pressures continued to hurt businesses, surveys showed on Thursday, darkening the outlook for the region’s fragile economic recovery. Manufacturing activity was weak in countries ranging from Japan, China, South Korea to Taiwan in a sign sluggish demand was adding to headaches for companies already suffering from lingering supply constraints.

On the other hand, the Chinese city of Chengdu will conduct mass Covid-19 testing from Thursday to Sunday, its city government said on Thursday. Earlier it was reported that several areas of Guangzhou and Shenzen in the south stepped up their Covid-19 restrictions.


Weak rupee


The rupee declined 3 paise to 79.55 against dollar in early trade. The dollar index was hovering near 109 and Asian currencies were broadly lower. Risk aversion and high Treasury yields boosted demand for the safe haven dollar. Dollar has an inverse relationship with equities. The likelihood that the Fed’s continued fast pace of rate hikes will push an economic downturn, has been weighing on demand for risky assets, Reuters reported. Fed officials have pushed against expectations of a slower pace of rate hikes and that the US central bank will cut rates later next year, it noted.



Fall in heavyweight
Index heavyweight Reliance Industries alone contributed about 250 points negatively to Sensex fall, following reports that the government revised upward windfall tax on crude oil.

The centre has increased the windfall tax on domestic crude oil to Rs 13,300 per tonne from earlier Rs 13,000 per tonne. It has also revised the cess on export of aviation turbine fuel (ATF) to Rs 9 per litre from Rs 2 per litre and increased additional excise duty on export of diesel has been increased from to Rs 12 per litre from Rs 6 per litre.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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