Sensex tanks 462 points, Nifty at fresh 5-month low: 7 reasons that led to the market mayhem
The marginal growth of core industries output growth numbers also weighed on investors' sentiment.
New Delhi: Markets ended sharply down on Thursday in line with global markets following the US Federal Reserve's hawkish comments after slashing the interest rates.
The BSE Sensex fell 462.80 points or 1.23 percent to 37,018.32 while the NSE Nifty dropped 138.00 points or 1.24 percent to 10,980.00.
Here are 7 reasons that has led to the market mayhem
1. The US Federal Reserve reduced the interest rates by 25 basis points to 2.0-2.25 percent on Wednesday for the first time since 2008. The US Fed also added that it is not the beginning of a long series of rate cuts. A huge sell-off was seen amidst Fed`s hawkish comments, that took the global investors by surprise.
2. The marginal growth of core industries output growth numbers also weighed on investors' sentiment. The government has also revised downwards the growth rate of these eight core sectors for May to 4.3 percent from the previous estimate of 5.1 percent.
3. Investors are also spooked by the sustained sell-off by Foreign Portfolio Investments (FPIs). The Lok Sabha had two weeks ago passed the Finance Bill, 2019. Ruling out tweaking the FPI surcharge, Finance Minister Nirmala Sitharaman had said trusts should register as companies to be out of the ambit of the surcharge. The Budget had proposed levy of an additional surcharge on individuals and trusts earning more than Rs 2 crore and Rs 5 crore, respectively. FPIs have pulled out Rs 16,000 crore from the market in July.
4. The current slowdown in the auto sector has also dented investors' sentiments. Auto sales of India's largest car manufacturer Maruti fell 33.5 percent in July while another auto major reported 15 percent dip in sales in July.
5. Lower than expected Q1 earnings by the companies are also one of the reasons that has slowed the stock market's momentum.
6. Amidst the ongoing trade-row between US and Chinese, negotiators of both side ended a brief round of trade talks with little sign of progress. Though both sides have agreed to meet again in September, markets are still reeling under fears of a looming US-China trade war.
7. Nifty broke below the crucial 200-DMA (day moving average) on Wednesday. The long-term trend indicator is used by analysts to predict the stock's future price direction.