Sensex falls below 34,000, turns negative for 2018: Key factors weighing on market
NEW DELHI: The BSE benchmark Sensex on Monday slipped below the 34,000 mark and pared all gains of the year, as the index plunged nearly 400 points on the day.
The index has slumped over 11 per cent since end of August.
The BSE Sensex slipped below 34,000 in the afternoon trade on Monday as against 34,056.80 on December 29 last year, while the 50-share Nifty index was trading near 10,200 against 10,530 in December last year.
What dampened market sentiment? Here are four key factors:
Rupee at record low: The looming spectre of a widening current account gap, exacerbated by the galloping crude oil prices, sent the rupee to a new low on Monday, with the unit slumping below the 74 mark, dimming further the appeal of local assets for overseas investors. The local currency was hovering 30 paise down at 74.07 against dollar in the afternoon trade.
Foreign capital outflows: Investors remained concerned over sustained foreign money outflows as foreign portfolio investors offloaded shares worth over Rs 7,000 crore in October till Friday. They sold shares worth Rs 1,488.96 crore in September. However, their net investment stood at Rs 262.72 crore in August, as per data available with depository NSDL.
US Treasury yields reached multi-year peaks, with the 10-year yield at its highest since 2014 and maturities at the short end of the curve at decade highs after economic data on Wednesday bolstered expectations for the Federal Reserve to raise rates in December and beyond.
China stocks trigger slide: Asian stocks took a beating, tracking a sharp 3 per cent slide in mainland China stocks that resumed trade after a weeklong holiday. latest rate cut by the People’s Bank of China. The decision by China’s central bank to cut reserve requirement ratios (RRRs) by 100 points to 15.5 per cent for large institutions and 13.5 per cent for smaller banks could not instill confidence among Asian markets, which feared the ongoing US-China trade war may only flare up. Markets across Japan, Hong Kong, Taiwan and Singapore dropped up to 1 per cent, hurting the domestic sentiment.
Boiling crude: Although the crude price plunged over 1 per cent in today’s trade but it is still very much above the comfort zone. Shankar Sharma, Vice-Chairman and Joint MD at First Global in a chat with ETNow said, “Rising crude oil prices are a concern for the domestic equity market. Crude oil above $60 per barrel triggers a crisis. We see crude rallying to $100 per barrel.” The commodity was hovering above $83 per barrel at present.
The index has slumped over 11 per cent since end of August.
The BSE Sensex slipped below 34,000 in the afternoon trade on Monday as against 34,056.80 on December 29 last year, while the 50-share Nifty index was trading near 10,200 against 10,530 in December last year.
What dampened market sentiment? Here are four key factors:
Rupee at record low: The looming spectre of a widening current account gap, exacerbated by the galloping crude oil prices, sent the rupee to a new low on Monday, with the unit slumping below the 74 mark, dimming further the appeal of local assets for overseas investors. The local currency was hovering 30 paise down at 74.07 against dollar in the afternoon trade.
Foreign capital outflows: Investors remained concerned over sustained foreign money outflows as foreign portfolio investors offloaded shares worth over Rs 7,000 crore in October till Friday. They sold shares worth Rs 1,488.96 crore in September. However, their net investment stood at Rs 262.72 crore in August, as per data available with depository NSDL.
US Treasury yields reached multi-year peaks, with the 10-year yield at its highest since 2014 and maturities at the short end of the curve at decade highs after economic data on Wednesday bolstered expectations for the Federal Reserve to raise rates in December and beyond.
China stocks trigger slide: Asian stocks took a beating, tracking a sharp 3 per cent slide in mainland China stocks that resumed trade after a weeklong holiday. latest rate cut by the People’s Bank of China. The decision by China’s central bank to cut reserve requirement ratios (RRRs) by 100 points to 15.5 per cent for large institutions and 13.5 per cent for smaller banks could not instill confidence among Asian markets, which feared the ongoing US-China trade war may only flare up. Markets across Japan, Hong Kong, Taiwan and Singapore dropped up to 1 per cent, hurting the domestic sentiment.
Boiling crude: Although the crude price plunged over 1 per cent in today’s trade but it is still very much above the comfort zone. Shankar Sharma, Vice-Chairman and Joint MD at First Global in a chat with ETNow said, “Rising crude oil prices are a concern for the domestic equity market. Crude oil above $60 per barrel triggers a crisis. We see crude rallying to $100 per barrel.” The commodity was hovering above $83 per barrel at present.