The S-P BSE Sensex and NSE Nifty 50 indexes nosedived in Thursday's session tracking weak global cues, after the US Federal Reserve rattled markets by signalling that its first rate cut in more than a decade was not the start of a lengthy easing cycle.
The Sensex index plunged as much as 787 points to trade below the 37,000 mark for the first time since March 5, and the broader NSE Nifty 50 benchmark dropped below the important psychological level of 10,900.
The selloff worsened the already soured investor sentiment, which took a hit after the government imposed higher taxes on the super rich including foreign investors, said analysts.
Here are 10 things to know about today's selloff:Forty three shares in the Nifty 50 basket were trading lower while in the 30-share Sensex basket, 25 stocks were struggling with losses.The Sensex plunged 639 points or 1.7 per cent to 36,842 and the NSE Nifty 50 Index dropped 1.7 per cent or 154 points to 10,931.All the 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty media Index's 3.6 per cent fall.
Nifty Metal, PSU Bank, Private Bank, Pharma, Information Technology, Financial Services and Bank sector gauges also dropped between 2 and 3.4 per cent each.Analysts said that the commentary by the US central bank on Wednesday fell short of expectations of monetary easing in the global markets.Global markets were expecting a more dovish Fed and are disappointed by mid cycle adjustment this has led to a rise in the dollar.
This is not good for emerging market equities like India," said Vivek Ranjan Misra, head of fundamental research at Karvy Stock Broking.Overnight in the US, the Federal Reserve decided to lower borrowing costs for the first time since 2008 and move up plans to stop winnowing its massive bond holdings.In a news conference after the release of the Federal Reserve's statement, Mr Powell characterised the rate cut as "a mid-cycle adjustment to policy", citing signs of a global slowdown, simmering US trade tensions and a desire to boost too-low inflation.(Read more on first US interest cut since 2008)"For Indian equities, this is on top of the headwinds it has faced recently, like foreign institutional investorsselling on account of tax proposals.
There are other reasons as well, firstly the weakness in economy has not abated, as evident by the core sector data and auto sales, Karvy Stock Broking's Mr Misra said."We continue to believe that the economy should stabilize in second half of current financial year and the markets should be in better shape in a couple of quarters."Foreign institutional investors (FIIs) pulled out a net Rs 12,418.73 crore ($1,803.9 million) out of Indian equities in July, data from NSDL showed.The Sensex and Nifty indexes had ended 0.22 per cent and 0.29 per cent higher on Wednesday, but finished the month with the worst performance in at least nine months.In July, the Sensex dropped 4.86 per cent and the Nifty plunged 5.69 per cent.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com.
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