Sensex plunges 1200pts, Nifty below 24200; Why stock markets crashed today?

Stock market crash: The Indian stock market crashed heavily on Friday, with the BSE’s Sensex dropping 1,207 points or 1.48 per cent to its intraday low of 80,082, while the NSE’s Nifty50 fell 368 points or 1.49 per cent at 24,180 in intraday trade.  

Weakness in the US and Asian stocks coupled with a slow recovery of the industrial production in the month of October may be playing on the minds of investors, suggested analysts.

 

Moreover, a resumption of selling by the foreign institutional investors (FIIs) may also be weighing on the markets. 

 

“Today’s market drop is led by the fall in US as well as Asian stocks, further the Index of Industrial Production at 3.2 per cent for October is not very attractive growth, and the recovery from 3.1 per cent in September has been very slow. This is further delaying the revival of the Indian economic growth," said Deepak Jasani, head of retail research at HDFC Securities. 

 

Going forward, a key level to watch for Nifty50 will be 24,000 mark, as Jasani sees further market correction if the index breaches the threshold.

 

“In the near-term the market has a headwind and a tailwind. The headwind is the resumption of selling by the FIIs who sold stocks for Rs 3560 crores yesterday. Given the high valuations in India FIIs are likely to sell more at every market rise. Selling has been profitable for FIIs since the dollar has been appreciating after the US election. The tailwind which can support the market is the declining inflation,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

 

Meanwhile, the index heavyweights that pulled the BSE Sensex down on Thursday in terms of contribution included HDFC Bank contributing 177 points and falling 1.45 per cent after Sebi issued a warning letter to the largest private lender on Thursday. 

 

Also Read: Sebi issues warning letter to HDFC Bank for regulatory non-compliance

 

Other index giants included Reliance Industries (128 points), Infosys (100 points), ICICI Bank (81 points) and Axis Bank (77 points). 

 

Furthermore, all 30 stocks were in red zone on the BSE Sensex with steel stocks being the top losers. Tata Steel fell the most, down 3.2 per cent, followed by JSW Steel slipping by 3.1 per cent.    Also Read: Nifty Metal slips 2% intraday; SAIL, NMDC down over 4%, Tata Steel over 2%  Other stocks included IndusInd Bank (down 2.8 per cent), Axis Bank (down 2.4 per cent), Bajaj Finserv (down 2.4 per cent) and M&M (down 1,7 per cent). 

 

Among sectoral trends, all sectors were trading in negative with the Nifty PSU Bank (down 2.62 per cent) and Nifty Metal (down 2.56 per cent) indices under severe stress. 

 

Individually among PSU Banks, Indian Overseas Bank fell the most in intraday deals, dropping 4.4 per cent intraday, followed by UCO Bank also dropping 4.1 per cent. Central Bank shares also fell 3.9 per cent, while Indian Bank slipped 3.5 per cent in intraday trade. 

 

The fall in Nifty PSU Bank and Metal indices index was followed by Nifty Realty, down 2.25 per cent, and Financial Services, falling 1.84 per cent. Others such as Nifty Pharma, Nifty Private Bank, Nifty Healthcare and Nifty Oil and Gas among others also fell over 1 per cent each in intraday deals. 

 

The broader markets also fell in line with benchmarks with the BSE SmallCap index down 1.85 per cent at 56,066.45 level intraday, while the BSE MidCap index dropping 1.63 per cent at 47,036.52 intraday.

 

Technical View

According to technical experts, Nifty50’s established range is 24,400–24700. “Friday’s trading day will be critical in determining whether the index concludes near the upper or lower end of this range, which could set the tone for the upcoming week. From a technical perspective, as long as Nifty holds above the confluence zone of the 50 DEMA and 89 DEMA around 24,400, bulls are likely to retain the upper hand,” said Sameet Chavan, head research, technical and derivative at Angel One.

 

Global markets

Asia-Pacific markets declined on Friday, following Wall Street's downturn, which was driven by a stronger-than-expected producer price inflation report.

 

The producer price index (PPI) in the US, which tracks wholesale inflation, rose 0.4 per cent in November, surpassing estimate of a 0.2 per cent increase. In Asia this morning, Japan’s Nikkei 225 fell 1.05 per cent, while the broader Topix index dropped 1.08 per cent.

 

South Korea's Kospi increased by 0.44 per cent. Australia's S&P/ASX 200 opened 0.41 per cent lower. Hong Kong’s Hang Seng index slipped 1.50 per cent. 

 

In the US overnight, all three major indexes closed lower, with the Dow Jones Industrial Average falling 0.53 per cent, marking its sixth consecutive day of losses.

 

The tech-heavy Nasdaq retreated from the 20,000 mark, dropping 0.66 per cent, while the broader S&P 500 declined 0.54 per cent.