Sensex Tanks Over 1200 Points: 10 Updates On Stock Market

Sensex Tanks Over 1200 Points: 10 Updates On Stock Market

New Delhi: The Sensex and Nifty suffered a bloodbath today, tracking a selloff in global equity markets. Overnight, the Wall Street suffered its biggest intraday decline in history. The Dow Jones Industrial Average ended with a loss of about 1,200 points - nearly 4.6 per cent. Shares in other Asian markets were also under strong selling pressure, with Japan's Nikkei down about 5 per cent. The Sensex fell as much over 1,200 points to 33,482 while Nifty tumbled below 10,300. The rupee also fell to 64.38 against US dollar, as compared to Monday's close of 64.06.

 

Here are 10 Points regarding this :- 

1)The trigger for the latest global selloff is Friday's job data in US, which showed American wages increasing at the fastest pace since 2009. This has raised alarm about higher inflation and with it potentially higher interest rates.

2)In anticipation of faster-than-expected rate hike from the Federal Reserve - the US central bank, bond yields have spiked in the US, undermining the attraction of equities. Higher bond yields are also seen as negative for emerging markets and commodity prices.

3)The US central bank had last month kept interest rate unchanged but said inflation would likely rise this year, raising the possibility faster-than-expected rate hikes.

4)On the other hand, global oil prices have dropped amid recent dollar strength, with international benchmark Brent futures hitting a one-month low of $66.90 per barrel earlier this week. A fall in global oil prices is seen as positive for India as the country imports bulk of its requirement.

5)Finance Minister Arun Jaitley on Monday attributed the downslide in the local bourses to selloff in global markets. "It is not due to the Budget or the LTCG (long-term capital gains tax)," he said.

6)Apart from global selloff, the domestic sentiment has been hit by the Budget announcement of 10 per cent tax on long-term capital gains accrued from equity investments, say analysts. The Sensex fell over 800 points on Friday and over 300 points on Monday.

7)The Street would also be closely watching Reserve Bank of India's (RBI) policy stance tomorrow. It is expected that RBI could turn more hawkish on inflation after inflation hit a 17-month high in December, well above its 4 per cent target.

8)"We expect the RBI to remain on a pause in this policy. However, the tone will likely be more hawkish with probability of rate hikes in FY2019 increasing," said Suvodeep Rakshit, senior economist at Kotak Institutional Equities.

9)Sameet Chavan of Angel Broking said investors "should stay light and avoid making any kind of bottom fishing till the definite signals emerge".

10)The selloff in Indian markets was broad-based with all the stocks in the Nifty50 index trading in the red. Among the big losers, Tata Motors slumped over 7 per cent while Axis Bank and Indiabulls Housing Finance plunged nearly 5 per cent each.