Sensex Sheds Over 500 Points from Day's High in Dramatic Selloff

The BSE Sensex turned sharply lower on Wednesday after earlier gaining by as much as 227 points. The broader Nifty, which advanced near 7,600 in early trade, dropped over 80 points to hit an 18-month low of 7,430 by 1 p.m. The dramatic move in domestic markets signals panic selling by some investors, analysts say.

Here are the latest developments:

1) The Sensex and Nifty are headed for their seventh fall in nine sessions in 2016. The Nifty has shed over 500 points or 6.5 per cent (including today's fall) in 2016.

2) The Sensex and Nifty underperformed most global markets today. Indian markets traded lower despite a higher close on Wall Street overnight. They were among the worst performers in Asia and underperformed markets in Europe, which traded in the green.  

3) Sustained selling by foreign institutional investors has hurt markets. FIIs have sold shares in seven of the previous eight sessions. Till Tuesday, they had taken out over Rs 5,000 crore from domestic cash markets. Domestic institutional investors have been buying shares, but they have not been able to match the selling by FIIs.

4) Continued selling pressure in the commodity prices, subdued start of quarterly earnings of India Inc., and weak global markets have dampened the sentiment of the Indian benchmark, said Gaurav Jain of Hem Securities.

5) Tata Consultancy Services, an index heavyweight, hit over 18-month low after the outsourcer missed revenue forecast for sixth straight quarter.

6) Wednesday's selloff was led by capital goods stocks, with the BSE sub-index falling over 2.5 per cent. Analysts say a sharp contraction in November factory output led to the selloff in capital goods stocks such as BHEL and L&T.

7) Banking stocks, especially state-run lenders such as Bank of Baroda, fell sharply after retail inflation rose for the fifth straight month in December. Rising inflation may halt RBI's easing cycle and will put pressure on banks.

8) The continued selloff in commodities also weighed on sentiments. Oil producer Cairn India fell over 2.5 per cent as crude oil prices slipped below $30 per barrel for first time in 12 years. Vedanta slumped 6 per cent and was top Nifty loser.

9) Right from the beginning of 2016, domestic markets have been rocked by plunges in Chinese stocks, the yuan's fall and subsequent heavy intervention by the Chinese authorities. China markets fell again on Wednesday, weighing on sentiments, traders said. China's Shanghai Composite today ended 2.4 per cent lower.

10) Anil Manghnani of Modern Shares & Stock Brokers told NDTV Profit that India is not a bear market yet. "The worst case scenario for Nifty may be 7,000, which would be a great entry. I don't think there is downside below that," he added.
 

The BSE Sensex turned sharply lower on Wednesday after earlier gaining by as much as 227 points. The broader Nifty, which advanced near 7,600 in early trade, dropped over 80 points to hit an 18-month low of 7,430 by 1 p.m. The dramatic move in domestic markets signals panic selling by some investors, analysts say.

Here are the latest developments:

1) The Sensex and Nifty are headed for their seventh fall in nine sessions in 2016. The Nifty has shed over 500 points or 6.5 per cent (including today's fall) in 2016.

2) The Sensex and Nifty underperformed most global markets today. Indian markets traded lower despite a higher close on Wall Street overnight. They were among the worst performers in Asia and underperformed markets in Europe, which traded in the green.  

3) Sustained selling by foreign institutional investors has hurt markets. FIIs have sold shares in seven of the previous eight sessions. Till Tuesday, they had taken out over Rs 5,000 crore from domestic cash markets. Domestic institutional investors have been buying shares, but they have not been able to match the selling by FIIs.

4) Continued selling pressure in the commodity prices, subdued start of quarterly earnings of India Inc., and weak global markets have dampened the sentiment of the Indian benchmark, said Gaurav Jain of Hem Securities.

5) Tata Consultancy Services, an index heavyweight, hit over 18-month low after the outsourcer missed revenue forecast for sixth straight quarter.

6) Wednesday's selloff was led by capital goods stocks, with the BSE sub-index falling over 2.5 per cent. Analysts say a sharp contraction in November factory output led to the selloff in capital goods stocks such as BHEL and L&T.

7) Banking stocks, especially state-run lenders such as Bank of Baroda, fell sharply after retail inflation rose for the fifth straight month in December. Rising inflation may halt RBI's easing cycle and will put pressure on banks.

8) The continued selloff in commodities also weighed on sentiments. Oil producer Cairn India fell over 2.5 per cent as crude oil prices slipped below $30 per barrel for first time in 12 years. Vedanta slumped 6 per cent and was top Nifty loser.

9) Right from the beginning of 2016, domestic markets have been rocked by plunges in Chinese stocks, the yuan's fall and subsequent heavy intervention by the Chinese authorities. China markets fell again on Wednesday, weighing on sentiments, traders said. China's Shanghai Composite today ended 2.4 per cent lower.

10) Anil Manghnani of Modern Shares & Stock Brokers told NDTV Profit that India is not a bear market yet. "The worst case scenario for Nifty may be 7,000, which would be a great entry. I don't think there is downside below that," he added.