Sensex crashes over 1,700 points, Nifty below 16,850: What led to today's market fall - Times of India

Sensex crashes over 1,700 points, Nifty below 16,850: What led to today’s market fall – Times of India


NEW DELHI: Equity indices plunged on Monday with the benchmark BSE sensex falling nearly 1,750 points amid heavy sell off across sectors.
After plunging to day’s low of 56,296, the 30-share BSE index finished 1,747 points or 3 per cent lower at 56,406; while the broader NSE Nifty settled 532 points or 3.06 per cent lower at 16,843.
Tata Steel, HDFC, SBI, ICICI Bank and IndusInd Bank were the biggest laggards on the sensex pack falling up to 5.49 per cent.
TCS was the only stock that finished in green.
Here are the top reasons for today’s market crash:
* Rising geopolitical tensions
The market crash was mainly induced by heavy global sell off fuelled by escalating tensions between Russia and the West over Ukraine.
“The correction in domestic markets is part of the global phenomenon. Foreign institutional investors are selling due to a high inflationary environment, tensions between Russia and Ukraine. That’s giving jitters to the market,” said Saurabh Jain, assistant vice president at SMC Securities.
Stock markets plunged globally as well as fears of a possible Russian invasion of Ukraine mounted.
Frankfurt and Paris opened down more than 3 per cent. London lost 2 per cent and Tokyo slid 2.2 per cent. Shanghai and Hong Kong also retreated.
Wall Street’s benchmark S&P 500 index lost 1.9 per cent on Friday after the White House told Americans to leave Ukraine within 48 hours.
Other governments including Russia pulled diplomats and their citizens out of the country.
* Crude oil price
Russia is one of the biggest oil producers. Any military action that disrupts supplies could send shockwaves through energy markets and global industry.
Crude oil prices started to rise after the US government cautioned its citizens living in Ukraine.
It hit a peak of $96.16, the highest since October 2014.
“Higher crude oil price is another major macro concern for India and if it remains at $95/barrel levels for an extended period, continuation of the accommodative monetary stance would be difficult,” V K Vijayakumar, chief investment strategist at Geojit Financial Services told news agency PTI.
Besides, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to ramp up output despite monthly pledges to increase production by 400,000 barrels per day (bpd) until March.
* Bank stocks under pressure
The bank index continued to be under pressure on both sensex and Nifty after CBI filed an official complaint against ABG Shipyard and its promoters accused it of defrauding banks.
The PSU Bank index crashed nearly 6 per cent, while private bank and bank index finished over 4 per cent lower.
On February 7, the CBI booked ABG Shipyard Limited, its former chairman and managing director Rishi Kamlesh Agarwal and others for allegedly cheating a consortium of banks of over Rs 22,842 crore.
According to figures from the forensic audit that were included in the CBI complaint, the company owed Rs 7,089 crore to ICICI Bank, Rs 3,634 crore to IDBI Bank, Rs 2,925 crore to the State Bank of India, Rs 1,614 crore to Bank of Baroda, Rs 1,244 crore to Punjab National Bank and Rs 1,228 crore to Indian Overseas Bank.
State Bank of India, where the accounts of ABG Shipyard were maintained, had filed the forensic audit in a report to the CBI.
* Continued inflation fears
Investors are continuously eyeing rate cuts to be done by the US Federal Reserve to curb inflation which is at a four-decade high and about how quickly Europe and other central banks would follow.
Japanese market interest rates have risen on expectations the Bank of Japan might follow the Federal Reserve and other central banks in withdrawing ultra-loose monetary policy and other stimulus that is boosting share prices.
India’s wholesasle price inflation stayed in the double digits in January, for the 10th month in a row, as firms grapple with rising input costs and more pass on higher prices to consumers.
The Reserve Bank governor also cautioned that retail inflation for January is expected to stay near its highest range of 6 per cent.
(With inputs from agencies)


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