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Markets crash: 5 reasons which pulled Sensex, Nifty down

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NEW DELHI: Markets extended its weak run for the sixth straight session with the benchmark BSE Sensex falling by over 1,200 points in the opening trade on Tuesday. Sensex opened 1,250 points lower at 33,506 while the 50-share NSE Nifty stayed below the 10,300-mark. The 30-share BSE index remained volatile after witnessing a steep fall in morning trade, however, Nifty moved above the 10,300-level.

Here are five factors that pulled the markets down today:

1. Market sentiment took a beating following sharp losses in other Asian markets which was driven by a record-loss on Wall Street after investor worries peaked over rising US borrowing costs, brokers said. Asian shares fell sharply after Wall Street suffered its biggest decline since 2011 as investors’ faith in factors underpinning a bull run in markets began to crumble.

“Since last autumn, investors had been betting on the goldilocks economy – solid economic expansion, improving corporate earnings and stable inflation. But the tide seems to have changed,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

2. Investors also turned cautious ahead of the RBI policy meet this week as they feel that repo rate might be increased amid inflation concerns. Repo rate is the rate at the which the central bank lends short-term money to commercial banks.

“Selling continued in the market as concern over bond yield and weak global market impacted the sentiment. Upcoming RBI monetary policy will be a key trigger for the market, the outcome of which is expected to be status quo, but any commentary over government’s fiscal policy and concern over rising yield will add volatility…,” Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.

3. In domestic markets, adding to the apprehension ahead of RBI monetary policy meeting which begins on Tuesday, the rupee depreciating by 29 paise to 64.36 against the dollar too dampened the sentiment, brokers said.

4. Investors lost a whopping Rs 5 lakh crore in just two trading sessions, with the stock-market rout prolonging over Budget proposals to tax equities coupled with a global sell-off.

Commenting on the markets’ poor show, Finance and Revenue Secretary Hasmukh Adhia said that the government will look into what it can do after a slump in local market reflecting global sell off. When asked if the government will scrap or review the long term capital gains (LTCG) tax which was introduced last week in the federal budget, Adhia said the local markets are mimicking global weakness, “but the government will look into what it can do”.

5. Strong selling pressure dragged down all the Sensex and Nifty components. Foreign institutional investors sold equities worth Rs 1,263.57 crore in Monday’s trade.

(With agency inputs)

Updated: February 6, 2018 — 8:29 am

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