Sensex, Nifty Plunge Sharply, Reversing A Two-Month Bull Rally

Indian equity benchmarks started September on a weak note, plunging significantly at the open tracking wider global economic gloom after data showed poor manufacturing performance in Asian factories.

The 30-share BSE Sensex index slumped 684.58 points, or 1.15 per cent, at 58,852.49, and the broader NSE Nifty-50 index fell 194.70 points, or 1.1 per cent, to 17,562.90.

From the Sensex pack, Infosys, Tata Consultancy Services, Reliance Industries, HDFC, Tech Mahindra, HDFC Bank, Hindustan Unilever, HCL Technologies and ICICI Bank were among the major laggards.

Bajaj Finserv, Bharti Airtel, Asian Paints and UltraTech Cement were among the gainers.

The Nifty IT index dropped 1.7 per cent. Additionally, the bank index fell 0.9 per cent.

Reuters reported that Indian stocks fell over 1 per cent early Thursday, pulled down by losses in information technology and banks, while a government move to raise taxes on fuel exports and domestic crude hammered energy stocks.

The government raised taxes on jet fuel exports to 9 rupees per liter from 2 rupees per liter, and also hiked the windfall tax for domestically produced crude oil from 13,000 rupees per tonne to 13,300 rupees per tonne, according to a notification, dragging the energy index down 1 per cent.

Shares of SpiceJet slumped as much as 14.7 per cent after its chief financial officer resigned, with the low-cost carrier posting a wider quarterly loss and facing increased scrutiny over mid-air incidents.

Data on Wednesday showed, India's economy expanded by a robust 13.5 per cent in the June quarter from a year ago, but below what was widely expected by the RBI, analysts and economists, with risks tilted more to the downside in the current fiscal year as higher interest rates cool economic activity.

But data on Thursday showed Asia's factory activity slumped in August as China's zero COVID curbs and cost pressures continued to hurt businesses, surveys showed on Thursday, darkening the outlook for the region's fragile economic recovery.

That weak data, and risk aversion pushed major Asian gauges down nearly 2 per cent, while US equity futures extended losses after the S&P 500 Index fell for the fourth straight day.

Oil prices fell to about $95 a barrel led lower by increased supply and worries that the global economy could slow further with renewed restrictions to curb COVID-19 in China.

On Wednesday, Indian stock, currency and money markets were closed on account of Ganesh Chaturthi, a day after soaring to mark several key milestones.

Equity benchmarks had surged over 2.5 per cent and ended higher for a second straight month on Tuesday, gaining over 3 per cent.

The Sensex jumped over 1,500 points, and the Nifty ended at its highest ever monthly close on charts, driven by financial and banking stocks, reversing a deep plunge on Monday.

All 30-Sensex constituents finished in the green, with IndusInd Bank, Tech Mahindra, ICICI Bank, Kotak Mahindra Bank, Tata Steel, and HDFC among the other major winners. Twelve of the 30 stocks that are part of the benchmark Sensex gained more than three per cent.

For two months in a row, foreign portfolio investors (FPIs) have been net buyers of the Indian equities markets. 

The last time foreign investors were net purchases was in September 2021.

FPIs had been dumping stocks in the Indian markets for the previous nine to ten months for various reasons up until early July.

FPIs had taken out a total of ₹ 168,798 crore in 2022; however, they were net buyers in July, investing ₹ 4,989 crore.

According to data, they have already purchased stocks worth around ₹ 51,204 crore in August.

The recent resumption of foreign investments and the apparent plateauing of global inflation both contributed to the recent uptick in Indian equity markets.

The current gains in stock indexes helped in recouping all the losses investors sustained in 2022. Indeed, the recent bull rally in Indian stock prices has increased investor wealth by almost ₹ 27 lakh crore.