Sensex crashes 1,021 points; Nifty settles at 17,327: Top reasons behind market fall

NEW DELHI: Stock indexes dragged into third straight session on Friday with benchmark BSE sensex down more than 1,000 points amid a general downtrend in the global market.
The 30-stock BSE index rose 1,020.80 points, or 1.73%, to 58,099. On the day, it fell 1,137 points or 1.92% to 57,981.95.
The NSE Nifty plummeted 302 points, or 1.72%, to 17,327.
PowerGrid, M&M, SBI, Bajaj Finserv, Bajaj Finance and NTPC were the biggest losers in the sensex package, down 7.93%.
Sun Pharma, Tata Steel and ITC were the only winners on the BSE, up 1.53%.
Here are the top reasons for today’s market drop:
* Power and financial stocks lead the decline
Financial shares fell after the central bank banned the financial services arm of Mahindra Group from using third-party agents to recover loans.
Shares of Mahindra and Mahindra Financial Services fell 13.1% after the Reserve Bank of India directed the company to stop using third-party services for loan recovery until the next order is placed.
“This move (by RBI) will be seen as negative for stocks as well as for car loan companies. It will reduce the efficiency of these companies,” said AK Prabhakar, head of the ministry. IDBI Capital’s research arm told Reuters.
The Nifty Bank Index is up about 19% so far this quarter and hit a high last week on expectations of higher credit growth.
“Banks are seeing some correction after outperforming other sectors,” Jain said, adding that there is no serious threat to banks’ growth though. difficult macro environment.
Shares of India’s Power Grid Corporation fell 8% and were the biggest losers in the Nifty 50 index.
* Fed’s positive stance
Investors are also concerned that the aggressive stance of the US Federal Reserve will trigger foreign fund outflows.
Fed members have been expected to ramp up and consistently raise interest rates over the next year or so, ushering in another wave of dollar buying that puts other assets in a race.
“Due to the Fed’s move, a lot of money going into emerging markets will come back,” Saurabh Jain, assistant vice president of research at SMC Global Securities told Reuters.
Refinitiv Eikon data shows that foreign investors sold a net $152 million in Indian stocks this week, following a net purchase of $819 million last week.
* Global markets wobble
Global stocks fell for a third day on Friday after the Federal Reserve and other central banks raised interest rates more to control persistent inflation that raised fears of a possible global recession. may happen.
London and Frankfurt opened lower. Shanghai, Hong Kong and Seoul fell. Oil prices fell by more than 1 USD/barrel. Japanese markets were closed for a holiday.
Investors fear central banks may be willing to endure a painful economic slowdown to keep prices in check.
* RBI policy is focused
Investors are also eyeing a rate cut by the Reserve Bank of India’s Monetary Policy Committee, which is scheduled to meet next week. Amid soaring inflation, high equities make it possible for the RBI to choose to raise rates by 50 basis points.
With retail inflation hitting 7% in August and the rupee continuing to weaken, a rate hike seems inevitable. However, the rate hike chosen by the RBI will be seen on September 30.
* Rupees at lifetime low
The rupee fell 19 paise to close at a lifetime low of 80.98 against the US dollar on Friday, weighed down by a strong US currency abroad and investors’ risk-on sentiment. .
On the interbank foreign exchange market, the local currency breached the 81 mark for the first time and fell to 81.23 against the US local currency. It ended up at 80.98, down 19 places from the previous close.
“Rupees fell to an all-time low against the US dollar after the Fed raised interest rates earlier this week. Most currencies are under pressure as the dollar continues to strengthen,” said Gaurang Somaiya, Invest. Forex & Bullion analysis, Motilal Oswal Financial Services said PTI.
(With input from agencies)

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