Key reasons why markets slumped today

Equity benchmark indices plunged on Monday due to heavy selling pressure on the back of increasing concerns that global economic growth could be impacted by the rising number of coronavirus cases outside China. Also, F&O expiry could induce some volatility during the week.

All sectors ended in the red, however, metal, pharma, banking and realty were the worst hit in today’s session.

The Sensex ended 807 points lower or 1.96% at 40,363 and the Nifty tanked 252 points or 2% at 11,829, clocked its worst fall since the Budget day.

Here are the top factors that led the market to fall in today’s trade:

Global markets: The global markets took a hit amid media reports citing that South Korea put the country on high alert after the number of infections hit more than 700 and deaths rose to seven, and in Italy, the number of cases jumped to above 150 from just three last week. Asian markets ended with losses while European indices traded with losses between 3.20-3.85%. Nasdaq and Dow futures were also down over 1.5%.

Rupee: The Indian rupee extended its decline amid heavy selling in domestic equities and strengthening of the American currency in the overseas market. The currency fell by 21 paise at 71.87/$.

Fall in metal & pharma stocks: In today’s trade, the metal and pharmaceutical stocks have been the most affected due to their direct dependence on China for raw material imports. The metal stocks were leading the decline on the NSE, with JSW steel, Hindalco, Tata Steel and Vedanta shedding between 6-9% each on the NSE.

Macro data in focus: Investors will be looking forward to the Gross Domestic data for the third quarter of FY20 to be out later in the week.

Gold price: International gold prices reached a fresh seven-year high and silver also scaled a new high. Gold prices surged over 2% to their highest in over seven years in the international market at $1,678.58. Dollar strengthened on a safe investment bet compared to other currencies as dollar sets unaffected by the coronavirus.

Meanwhile, media reports mentioned that the International Monetary Fund (IMF) has warned that the coronavirus epidemic could put an already fragile global economy recovery at risk. Global growth was poised for a modest rebound to 3.3% this year, up from 2.9% last year.

On the flip side, any positive outcome from the US president’s India visit in terms of strategic partnership/trade deal could cheer the Indian markets.

Share Market Update: Sensex, Nifty Crash To Lowest In 5 Months; SBI, Yes Bank Dip 4.5%

Amid the continuation of selloff in Indian markets, domestic indices BSE Sensex and NSE Nifty 50 plunged Thursday's session on the back of weak global cues following a humdrum economic data, unabated foreign fund outflows and disappointing quarterly earnings. The carnage in today's session dragged indices to fresh five-month lows with the S&P BSE Sensex slipping below the 37,000 mark.  After a weak opening, the 30-share BSE Sensex plunged more than 750 points in late-afternoon trade, before finally ending at 37,018.32, down by 462.80 points or 1.23 per cent.

Likewise, the broader NSE Nifty dropped 138 points or 1.24 per cent to end at 10,980.00. In the Sensex pack, Vedanta took the biggest hit (5.55 per cent), followed by Tata Motors, SBI, Yes Bank, Bharti Airtel and Infosys, which lost up to 4.50 per cent. On the other hand, Maruti, Power Grid, Reliance, Bajaj Auto, Hero MotoCorp, HUL and NTPC ended in the green, spurting up to 1.86 per cent.

After the release of official data post market hours on Wednesday, the overall investor sentiment was weak and it showed that growth of eight core industries dropped to 0.2 per cent in June, mainly due to contraction in oil-related sectors as well as cement production. In addition to that, fiscal deficit touched Rs 4.32 lakh crore for the June quarter, which is 61.4 per cent of the budget estimate for 2019-20 financial year.

Even on the global front, the US Federal Reserve reduced the benchmark lending rate by 25 basis points to 2.0-2.25 per cent on Wednesday for the first time in more than a decade. However, Fed Chair Jerome Powell said the move was not the beginning of a long series of rate cuts, sending global markets lower.

A disappointing July sales data was reported by major automobile manufacturers on Thursday. In addition, subdued corporate earnings also continued to weigh on the markets, traders  noted.  Foreign investors sold shares worth Rs 1,497.07 crore on a net basis on Wednesday, as per provisional data with stock exchanges.

Elsewhere in Asia, Shanghai Composite Index, Hang Seng, and Kospi ended in the red, while Nikkei edged higher. Equities in Europe were trading mixed in their early sessions. Meanwhile, the rupee was trading 26 paise lower at 69.06 against the US dollar (intra-day). The global oil benchmark Brent crude futures fell 1.05 per cent to USD 64.37 per barrel.