Dalal Street investors become poorer by Rs 4.3 lakh crore as the market capitalisation of all BSE-listed companies decreased to Rs 270 lakh crore.
Among Sensex stocks,
, , , and were the top laggards in today’s trading session, falling around 2-3.5 per cent. , , , and also settled lower. However, and managed to end the session with gains.
Sectorally, Nifty Realty index was the worst performer, falling 3.07 per cent. Nifty Metal, Media IT, Consumer Durables, and Auto indexes also ended with cuts. Nifty Midcap50 and Smallcap50 dropped 1.68 per cent and 1.57 per cent, respectively.
Here are a host of factors that dragged the markets lower:
Amid macro worries, foreign institutional investors or FIIs, have become net sellers in the market. After offloading Indian stocks worth over Rs 7,600 crore, FIIs have been net sellers to the tune of nearly Rs 1,500 crore so far this month. Yesterday’s sell-off stood at Rs 2,139 crore.
“India’s outperformance to date made a case for profit booking for the FIIs today as geopolitical and currency risks came to the forefront,” said S Ranganathan, Head of Research at LKP Securities.
Weak global markets
Roiled by worries over aggressive rate hikes by the US Fed, Asian shares were mostly lower on Tuesday. Japan’s Nikkei225 closed 2.64% lower, while South Korea’s Kospi declined 1.83% and Hong Kong’s Hang Seng dropped 2.2%.
In the European markets too, the mood was bearish as the blue-chip FTSE 100 fell 1.1%, its fifth consecutive day of losses.
The yield on the 10-year U.S. Treasury note hit 3.99% earlier in the day on bets that the Fed would opt for another 75 basis points hike in early November in its bid to combat inflation after a strong jobs report.
Although the Indian rupee settled 5 paise higher at 82.35 against the US dollar today amid support from RBI, the domestic currency’s weakness has been weighing on equities. Rupee has so far weakened around 11% against the greenback. The US dollar index was above the 113-mark today.
Unending macro headache
JP Morgan CEO Jamie Dimon added to the pessimism in the market when he warned of a recession in the next 6-9 months.
“There is growing pessimism in the markets now, and with some big data points to come from the US this week, not to mention the start of earnings season with JP Morgan among those getting us underway, investors should probably brace for more volatility ahead,” Craig Erlam, Senior Market Analyst, OANDA, said.
Warning of material risk to UK financial stability, The Bank of England said it would buy up to 5 billion pounds ($5.51 billion) of index-linked debt per day.
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