Sensex tanks 1,200 points in two sessions: Key points leading to the crash

Taking into account the steep fall on Friday, the Sensex has so far crashed 1,200 points in just two sessions amid a mix of domestic and global factors that drove the stocks lower.

FP Staff November 15, 2016 13:27:59 IST
Sensex tanks 1,200 points in two sessions: Key points leading to the crash

Indian stock markets continued to reel under intense selling pressure for second straight session, tanking by 500 points in early trade on broad market weakness. Faced by cash crunch over the government's move to demonetise the old currency notes of Rs 500 and Rs 1,000, investor sentiment appeared to have taken a beating in last few sessions, said dealers.

Sensex tanks 1200 points in two sessions Key points leading to the crash

Reuters

Taking into account the steep fall on Friday, the Sensex has so far crashed 1,200 points in just two sessions amid a mix of domestic and global factors that drove the stocks lower.

Besides the subdued mood prevailing in the market due to the ongoing blackmoney eradication drive, several other factors in play too are playing on the minds of investors leading to a weak market sentiment.

1) Sluggish Asian markets: Markets across Asia are exhibiting a mixed trend, with worries about a possibile US rate hike next month prompting investors to trim their holdings in emerging markets, including India.

2) Rupee takes knock: The domestic currency rupee fell sharply by 40 paise against dollar to 67.65, its lowest level since 30 June, 2016. The trend has been more or less similar against other major currencies, which are declining sharply against dollar ever since Donald Trump won the US presidential election.

3) FII outflows: In the wake of falling rupee against the greenback, foreign fund outflows have been gaining momentum in last few sessions. With the US Fed more likely to hike rates in December and inflation seen hardening there, FIIs are pulling out funds from local equities to move safe havens such as investing in dollar. In last three sessions, FIIs have sold local equities worth Rs 4,168 crore.

4) Weak economic data: Economic data released on Friday showed manufactuing sector grew by a tepid 0.7 percent year-on-year in September, indicating the continuing sluggish growth in factory output. The government, however, remains confident about achieving the growth target of 8 percent for FY17, with good monsoon and hopes of strong consumer spending aiding the sentiment.

5) Consumer stocks fade: Shares of Tata Motors, Tata Steel, Asian Paints, Maruti tumbled over 4-7.5 percent. While the broad indices are down mainly due to fall in real estate / construction related stocks and automobiles, in other major segments, finance-related stocks in addition to construction-related have crashed.

"If you notice, the crash is aggravated also due to the fact that many stocks in gold loan, micro-finance, NBFC and cements were over-valued before this announcement on black money - hence, they are are not able to withstand the stress and they are crashing," said G Chokkalingam, Founder & Managing Director, Equinomics Research & Advisory.

Updated Date:

also read

After 100 crore milestone, Narendra Modi to meet seven Indian COVID-19 vaccine manufacturers today
India

After 100 crore milestone, Narendra Modi to meet seven Indian COVID-19 vaccine manufacturers today

Representatives from Serum Institute of India, Bharat Biotech, Dr Reddy's Laboratories, Zydus Cadila, Biological E, Gennova Biopharma and Panacea Biotech will attend the meet

More trust, transparency than ever before, says PM Modi as he inaugurates seven new State-run defence firms
India

More trust, transparency than ever before, says PM Modi as he inaugurates seven new State-run defence firms

The government had decided to replace the over 200-year-old Ordnance Factory Board into seven entities to improve self-reliance in the country's defence preparedness

Market roundup: Sensex up by 148 points, Nifty at 17,991; check top gainers and losers
Business

Market roundup: Sensex up by 148 points, Nifty at 17,991; check top gainers and losers

Sectors like FMCG, PSU Bank, auto, and metal indices witnessed a hike of 1-3 percent while the IT index saw a decrease of nearly one percent