Sensex Suffers Biggest Loss Since Brexit, Slumps Nearly 450 Points
Correction in September can be steeper, say some analysts A rate hike in the US would make emerging markets less attractive Year-to-date, foreign investors have pumped in over $6 billion
Tracking a global selloff in risk assets, the BSE Sensex and the broader Nifty suffered their biggest fall since Britain voted to leave the EU on June 24. The Sensex sank 443 points to end at 28,353, after tumbling as much as 546 points at day's low. The Nifty ended at 8,715, down 151 points. The rupee also fell sharply, down nearly 30 paise to 66.97 per dollar at day's low.
Here are 10 things to know about the market selloff today:
1) The worldwide selloff in risk assets today was triggered by talk that the Federal Reserve might be serious about lifting US interest rates as early as next week.
2) A rate hike in the US would make investing in emerging markets such as India less attractive for foreign investors.
3) Year-to-date, foreign institutional investors have pumped in over $6 billion in domestic markets, helping the Sensex and Nifty rally near record highs. Further profit-taking by foreign investors could jeopardize the rally, traders added.
4) Analysts say that Indian equities are likely to remain under pressure ahead of the Federal Reserve meet on September 20-21. "We feel the correction in September can be steeper than most expect... The Nifty has rallied almost non-stop from 7,940 on June 25 to near 9,000 on September 8, returning over 13 per cent," said Sanjeev Bhasin of IIFL.
5) 8,600 is seen as a crucial level for Nifty. If this level is breached, the selling pressure could accelerate, says market analyst Anil Manghnani.
6) 46 of 51 Nifty50 components ended lower today. Metal and banking stocks, which had run up sharply over the last few months, came under strong selling pressure today. Tata Steel, Yes Bank and Bank of Baroda slumped over 5 per cent. Hindalco slumped 9 per cent to be the top loser in the Nifty50 index.
7) The broader markets suffered steeper losses than the largecap stocks. The BSE midcap index slumped nearly 3 per cent.
8) Some buying was seen in IT stocks, which had underperformed in the recent rally. Infosys gained 1.8 per cent while Tech Mahindra rose 1.2 per cent.
9) Asian markets ended sharply lower today while European markets traded with deep cuts.
10) On Friday, the Dow shed 2.13 per cent on Friday, while the S&P 500 lost 2.45 per cent and the Nasdaq 2.54 per cent.
