Sensex slips on 700 points; 6 Key Factors Behind Today’s Stock Market Drop

Benchmark BSE Sensex and NSE Nifty stock indices fell more than 1% in early trading on Friday following weak global signals. The 30-stock Sensex traded over 700 points at 54576 around 9:38 am (IST). In contrast, the 50-stock Nifty Index fell 214 points to 16,263 around the same time. The market watcher believes soaring inflation, recession fears and the prospect of an increasingly hawkish Federal Reserve are making investors nervous around the world.

As many as 26 stocks in the Sensex pack traded in the red at the start of the trade. With a 3.53% drop, Wipro became the biggest loser of the bunch. It was followed by Bajaj Finance (down 3.29%), Tata Steel (down 2.75%) and Kotak Mahindra Bank (down 2.84%). Tech Mahindra, HDFC, Infosys and Bajaj Finserv also fell between 1.50% and 2.50%.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: “The strengthening in the US 10-year bond yield to 3.05% can be interpreted as a market update on worse-than-expected inflation data at United States Friday. If the inflation data turns out to be worse than expected, stock markets will turn bearish. If not, the markets will begin to rebound next week. »

Here’s a look at the factors that drove the benchmarks in trading today.

Weak global indices: U.S. markets ended lower on Thursday as investors expected incoming data to show continued high levels of consumer prices in May. Asian markets traded mostly in the red on Friday after the ECB’s rate hike forecast confused investors awaiting key inflation data from the United States.

Ongoing Inflation Problems: Traders will be concerned by reports that Foreign Minister S Jaishankar has said that the Russian-Ukrainian war has caused a fuel, food and fertilizer crisis which will lead to famine situations and impact very significant inflationary. Currently, retail inflation is at its highest level in 95 months due to soaring prices in all major commodity groups.

Widen the current account deficit? Sentiment also took a hit with India Ratings’ report suggesting the country’s current account deficit is set to hit a three-year high of 1.8% or $43.81 billion in FY22. against a surplus of 0.9% or $23.91 billion in FY21.

Sale by FII: Foreign institutional investors (FIIs) continued to be net sellers in the domestic stock market, unloading Rs 2,407 crore from shares on Thursday. Overall, they sold shares worth Rs 1.80 lakh crore on an annual basis in 2022.

Rupee drop: The rupee depreciated 8 paise to a record low of 77.82 against the US dollar when trading opened on Friday, following the strength of the greenback in the overseas market.

Jateen Trivedi, VP Research Analyst, LKP Securities said, “WTI crude above $120 a barrel is now a concern for all markets and nations, especially those that are net importers like India. Crude prices above $125 a barrel will disrupt major markets and volatility will increase along with outflows from domestic markets, hence the pressure on the rupiah which will increase if crude begins to trade and settle at the above $125 a barrel. The rupee can be seen in a range of 77.55-77.95 until then.”

Covid cases: Adding to the pessimism, India’s daily Covid-19 cases rose further, with government data released on Thursday showing daily cases rose by 7,240 in the past 24 hours, the highest since March 2.

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