Sensex posted its biggest one-day crash in over six months, plummeting 1,159 points on Thursday amid worries over tightening liquidity by the central bank and stretched valuations.
While Sensex plunged 1,158.63 points to close at 59,984.70, Nifty fell 353.70 points to settle at 17,857.25. Both the indices recorded their biggest fall since April 12. Three banks — ICICI Bank, HDFC Bank and Kotak Mahindra Bank — contributed to half the drop in Sensex. Thursday’s sell-off wiped out Rs 4.8 lakh crore of investor wealth, taking the combined market capitalisation of BSE-listed companies to Rs 260.49 lakh crore.
The rupee, however, settled 11 paise higher at 74.92 against the dollar despite the massive sell-offs in the domestic equity market as easing crude oil prices lent some support to the local currency.
Meanwhile, the 10-year benchmark 6.10%-2031 bond yield ended up at 6.3670%.
The Nifty50 is currently trading at 21.95x of its one-year forward earnings, which is a 20% premium to its five-year average. In comparison, Kospi commands a one-year forward PE of 10.86x while Bovespa is at 7.96x. The Jakarta Composite trades at 15.86x of its expected 12-month earnings, Taiwan TAIEX trades at 13.65x, Bloomberg data showed.
All Asian markets lost the ground on Thursday with India being the worst performer. While Shanghai Composite and Jakarta Composite slid 1.2% each, Korea’s KOSPI and Taiwan TAIEX fell 0.53% and 0.2% respectively. “Asian stocks fell Thursday amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy,” said Deepak Jasani, head of retail research at HDFC Securities.
Foreign portfolio investors (FPIs) have been trimming their positions more persistently, remained net sellers for the last seven sessions. On Thursday FPIs sold Indian equities worth $510 million, provisional data on exchanges showed. With Thursday’s sale, FPI’s have sold Indian shares worth $2.2 billion in the last seven sessions. Local investors — including banks, mutual funds and financial institutions have bought shares worth $648 million during the same period.
Meanwhile, Morgan Stanley downgraded India stocks to equal-weight from overweight in its model portfolio, citing strong gains. Earlier this week, Japanese brokerage Nomura had also downgraded the Indian stocks to neutral from an overweight.