Sensex Crashes Over 400 Points On Darkening Global Mood

Indian equity benchmarks crashed on Thursday, extending losses from the previous session on a darkening mood in global risk markets ahead of the US inflation data, while cryptocurrencies remained under pressure after crypto exchange Binance dropped its bailout bid for rival FTX.

The BSE Sensex index crashed 419.85 points, or 0.69 per cent, to close at 60,613.70, and the broader NSE Nifty index declined 128.80 points, or 0.66 per cent, to end at 18,028.20.

In the previous session, the Sensex fell 151.60 points, or 0.25 per cent, to end at 61,033.55. The Nifty fell 45.80 points, or 0.25 per cent, to close at 18,157.

With a loss of 3.54 percent, Axis Bank led the Sensex group of losers, followed by Bajaj Finserv, Titan, M&M, Bajaj Finance, and IndusInd Bank.

HDFC Twins, Bharti Airtel, Kotak Bank, Dr. Reddy's, and HUL, on the other hand, were the gainers, rising as high as 1.13 percent.

The US inflation data may greatly drive the magnitude of the Federal Reserve's future interest rate hikes due later on Thursday.

All eyes will be on US inflation figures due later in the day, which could potentially drive the Fed's rate hike path. According to economists surveyed by Reuters, the headline consumer price index eased to 8 per cent in October from a year ago, down from 8.2 per cent in September.

"I think the biggest risk going into today's US CPI release is for the markets to be over-reading it. There is potential for a softer print, no doubt, but the Fed has already communicated a downshift in its rate hike trajectory without exiting its hawkish bent," Charu Chanana, Market Strategist at Saxo Markets, told Reuters.

With investors also digesting the US midterm election results, a crypto-crisis weighed on risk sentiment and strengthened the dollar.

On Wednesday, the Binance exchange backed out of a bailout arrangement for its rival FTX, leaving FTX CEO Sam Bankman-Fried rushing to consider all possibilities for his company.

Binance had made a non-binding deal just one day to purchase FTX's non-US unit to aid with a "liquidity constraint."

"I do think there's been a bit of contagion from what's been going on in crypto...It does seem to be having something of an unsettling effect," Ray Attrill, Head of FX Strategy at National Australia Bank, told Reuters.