Key reasons why Sensex plunged 770 points, biggest fall in nearly 2 months; Nifty dives below 10,800

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Updated: Sep 03, 2019 4:36 PM

The headline indices Sensex and Nifty plunged on Tuesday afternoon, posting their worst fall in nearly 2 months, after macroeconomic data suggesting severe slowdown spooked investor sentiment.

kashmir sensex, markets kashmirThe Sensex closed 770 points down at 36,562.91 while the Nifty ended the session below the 10,800-mark.

The headline indices Sensex and Nifty plunged on Tuesday afternoon, posting their worst fall in nearly 2 months, after macroeconomic data suggesting severe slowdown spooked investor sentiment. The Sensex closed 770 points down at 36,562.91 while the Nifty ended below the 10,800-mark. Intra-day, the Sensex plunged 866 to hit the day’s low at 36,466 tracking heavy selloff in banking, energy and auto stocks after India’s Q1 GDP plunged to a 6-year low, according to government data released on Friday. The Nifty shed more than 2% to 10,798. This is the worst fall for Sensex and Nifty since July 8th.

Also read: IDBI Bank to get capitalised with Rs 9,000 crore from govt, LIC; shares surge 10%

Taking stock of the deep plunge in stock market, technical analyst Milan Vaishnav said that the technically weak markets had multiple negative views to deal with on Tuesday. “The US Dollar index had marked a fresh high and this had a detrimental effect on the domestic currency. Along with this, the FII selling continued over the heightened concerns over the slowdown in the economy which was highlighted by weak GDP and IIP numbers and dismal Auto sales,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services told Financial Express Online.

According to government data, the growth of eight core industries dropped to 2.1% in July, mainly due to a contraction in coal, crude oil and natural gas production. Further, the IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 51.4 in August, its lowest mark since May 2018, from 52.5 in July. Top losers in the Sensex pack included ICICI Bank (4.4% down), VEDL (3.7% down), Tata Steel (3.9% down), HDFC (3.7% down), IndusInd Bank (3.6% down).

Shares of Tech Mahindra, HCL Tech were the only shares ending the session in the green. All sectoral indices ended in the red, with BSE metal, energy, consumer durables, telecom, bankex, finance, oil and gas, realty and capital goods indices shedding up to 3.2 per cent. The BSE midcap and smallcap indices too closed up to 1.65% down, amid the stock market rout. After the mega PSU Bank merger announced by the Narendra Modi-led government, shares of Indian Bank, Union Bank, Canara Bank, PNB, OBC shed up to 11%, even as global brokerages see near-term pain. The Indian rupee plunged 90 paise (intra-day) to 72.27 against US dollar. 

After a holiday on Monday, the Indian equity markets started the week on a negative note led by muted Q1GDP number and weak auto sales numbers, noted Ajit Mishra Vice President, Research, Religare Broking. “In the near-term, weak domestic sentiments and uncertain global cues may continue to have negative impact on the Indian markets,” Mishra said. Religare Broking continues to remain cautious until there are meaningful signs of revival in the economy. “Further, falling rupee (vs US$) is a key concern which could negatively impact the sentiments. On global front, trade tension between US-China is likely to induce volatility across markets,” he added.

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