Rs 3 lakh crore investor wealth wiped off: Key factors behind Sensex crash today

NEW DELHI: Over Rs 3 lakh crore worth of investor wealth was wiped off on Dalal Street on Monday morning as Sensex plunged over 800 points to hit the day's low at 57,365.68. The selloff comes amid weak global cues following a solid US September jobs report which raised fears about aggressive rate hikes by the US Fed.

The total market capitalisation of all companies listed on BSE dropped by Rs 3.11 lakh crore to Rs 272.5 lakh crore.

Here are key factors dragging the stock market lower today:

• Fed fear after jobs data

Fears around aggressive rate hikes by the US Federal Reserve were back to haunt investors as the surprisingly low US unemployment rate at 3.5 per cent implies that the Fed will have to continue raising interest rates longer than the markets had discounted.

Pricing of futures tied to the Fed's policy rate implied a 92% chance that the Fed will raise its policy rate, now at 3%-3.25%, to a 3.75%-4% range when it meets on Nov 1-2. If the fears are true, then Powell will deliver a fourth straight 75-basis point interest rate hike next month.

"The paradoxical construct of good economic news turning out to be bad news for markets played out again last Friday in the US," said Dr V K Vijayakumar, Chief Investment Strategist at .

• FII selling

Having sold Indian equities worth over Rs 7,600 crore last month, foreign institutional investors or FIIs were net sellers to the tune of Rs 2,251 crore on Friday amid a depreciating rupee.

• Crude oil prices

Benchmark Brent crude futures jumped more than 11% last week after the Saudi-led production cartel agreed to cut production. Inching closer to the $100 a barrel mark once again, Brent was trading at $97 on Monday morning.

• Rupee fall

The Indian rupee fell 38 paise to hit a lifetime low of 82.62 against the US dollar on Monday. The domestic currency is down over 11% so far in the calendar year 2022. The US dollar index, which measures the greenback against a basket of 6 currencies, was trading near the 113 mark.

• Bond yields

Yields on 10-year US Treasury notes inched towards 3.90% and the two-year note at 4.3% in anticipation that the Fed will keep its resolve to tighten monetary policy. "The labour market is still strong and inflation is not dropping quickly, which still means the Fed could take rates as high as 5% and that will break parts of the economy," said Edward Moya, Senior Market Analyst, OANDA.

• Global markets

The mood was subdued in the Asian markets where Japan and South Korea were shut for a holiday. MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.4%. On Friday, Dow Jones had ended over 2% lower.

• Technical factors

Analysts said Nifty had resistance around the 17,400 mark. Now the biggest make-or-break support is placed at 17,000 and below the same, the index could slip quickly to the 16,747-16,775 zone.