Benchmark indices logged their worst day in nearly two months on Thursday as they slid 1.5% in a sudden crash after rising initially in the day. The renewed escalation in Russia-Ukraine war and concerns that the US Federal Reserve may not cut interest rates in its December meeting were the key factors weighing on investors.
Market participants said the expiry of monthly Nifty derivatives contracts likely exacerbated the correction and volatility. This was also reflected in the outperformance of broader markets even as they fell off their day’s highs. While the BSE midcap index ended flat, the BSE Smallcap index closed with 0.4% gains. Even as 46 of the Nifty 50 stocks ended in the red, the overall market breadth was in favour of advances, reflecting the outperformance.
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Foreign portfolio investors (FPIs) offloaded shares worth Rs 11,756 crore in their third biggest single-day selling ever in India. On the other hand, domestic institutional investors (DIIs) bought Rs 8,718 crore worth of shares.
Consequently, Sensex fell 1,190 points to close at 79,043.74 points, and the Nifty dropped 361 points to settle at 23,914.15 points.
The sudden market crash was attributed to a major missile and drone attack on Ukraine’s power infrastructure by Russia, in response to the former’s use of the US- and UK-supplied missiles.
Information technology companies were the worst-hit due to interest rate worries. The renewed concerns follow the release of PCE index, the US Fed’s preferred inflation gauge, which rose 2.3% in October.
With sticky inflation expected to slow down rate cuts, the Nifty IT index fell 2.4%. Among its key constituents, Wipro, Tata Consultancy Services, Tech Mahindra, HCL Tech and Infosys ended 1.5-3.5% lower.
Apart from real estate, media and PSU banks, all other sectoral indices ended in the red on NSE.
Sunny Agrawal, head of fundamental equity research at SBICAPS Securities, pointed to weakening fundamentals continuing to weight on markets.
“Fundamentally, things have not been good, especially with regard to Q2 numbers. But the expectation is that with government capex likely to come back and festive season boost, there could be earnings revival. But it is going to be tall ask given the weak growth seen in the first half of FY25,” he said.
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