Sensex Stages Swift Recovery After Plunging Over 1,200 Points: 10 Points

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.

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Sensex Stages Swift Recovery After Plunging Over 1,200 Points: 10 Points

The Sensex fell over 1,200 points to 33,482 while Nifty tumbled below 10,300 in intraday trade

The Sensex closed 561 points lower at 34,195 on Tuesday, staging a big recovery after plunging nearly 1,275 points during the session. The NSE benchmark index - Nifty - settled 168 points lower at 10,498. The Nifty had plunged to an intraday low of 10,276 on Tuesday. The pullback in Indian markets tracked recovery in Dow futures, which moved into positive territory reversing steep losses, indicating the Wall Street was likely to open higher later in the day. The rupee also pared losses after falling to 64.39 at day's low. In recent trade, the rupee was at 64.18 against the US dollar vs its Monday's close of 64.06.
10 Updates On Selloff In Sensex, Nifty Today:
  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 the bulk of its requirement.
  5. 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.
  6. The government will look into what it can do after a slump in local market reflecting global selloff, Finance Secretary Hasmukh Adhia said today. Mr Adhia said he will discuss the issue of fall in local markets with Finance Minister Arun Jaitley.
  7. The Street would also be closely watching Reserve Bank of India's (RBI) policy stance on Wednesday. It is expected that the 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. Some analysts expect markets to settle down soon. "Markets had gone up too fast and a correction was more than overdue. All negatives including Fed hikes and inflation worries in India have come together. I expect 7 to 10 days for the markets to settle down," said Arun Kejriwal, founder of Kejriwal Research & Investment Services.
  10. The selloff in Indian markets was broad-based with all BSE sectoral indices closing in the red. Among the top losers on the 50-scrip Nifty, TCS, Tech Mahindra, HCL Tech, Tata Motors and Lupin ended the day with losses between 3.4 per cent and 5.7 per cent.




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Highlights

1
US jobs data has led to possibility of faster-than-expected Fed rate hike
2
Overnight, Dow Jones Industrial Average slumped more than 4%
3
Among Asian other markets, Japan's Nikkei nosedived 5%

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