Sensex crashes 1,000 points: What's behind today's decline?
What's the story
Indian stock markets witnessed a major crash on Monday. The fall was mainly due to rising global bond yields, surging oil prices, and a new record low for the Indian rupee. At the time of writing, Sensex was down by 988 points or 1.3% to 74,249.7 while Nifty was trading at 23,339.8, down by over 300 points. The steep fall erased nearly ₹5 lakh crore from the total market capitalization of BSE-listed companies, bringing it down to ₹456 lakh crore.
Market volatility
Nifty Consumer Durables leads losses
The India VIX, which gages market volatility, surged over 5% to around 19.78. The market selloff was broad-based with Nifty Midcap 100 and Nifty Smallcap 100 indices falling over 1% each. All indices barring Nifty IT traded in the deep red with Nifty Consumer Durables leading losses by crashing more than 2%. Of the stocks on NSE, around 2,152 declined while only a mere 488 advanced and just about 110 remained unchanged.
Expert analysis
Analyst warns of a tough week ahead
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, had already warned of a weak start to the week due to global cues. He said elevated crude prices could trigger another round of fuel price hikes, negatively impacting inflation. The spike in US 10-year bond yield to 4.62% is another negative factor for emerging markets (EM) equity markets. "Rupee may further depreciate aggravating the vicious cycle of rupee depreciation and FPI selling," he added.
Influencing factors
Global factors affecting Indian stock markets
Here are the key factors influencing today's stock market: 1) US President Donald Trump warned that "the clock is ticking," as diplomatic talks with Iran remain deadlocked. 2) Bond yields hit record highs globally amid inflationary pressures and fiscal concerns due to the ongoing West Asia conflict. 3) The rupee fell to a new all-time low of ₹96.18 against the US dollar on Monday, surpassing its previous record of ₹96.13. 4) Oil prices surged back above $112 per barrel.