Sensex tumbles 1,400 points, Nifty approaches 16,550: five factors behind the stock market crash
Sensex fell 1,400 points in today’s afternoon session, following general losses amid a sell-off in global markets. Sensex lost 1,401 points to 55,610 and Nifty lost 425 points to 16,559.
Bajaj Finance was Sensex’s first loser, losing 5.39%, followed by IndusInd Bank, Bajaj Finserv, Tata Steel, SBI, Axis Bank and HDFC Bank. On the other hand, Dr Reddy’s and HUL were the only winners, reaching 0.38%.
India VIX rose 14.11% to 18.65 from the previous close of 16.34 indicating increased volatility in the Indian market.
Here is a look at five factors that led to the stock market crash today.
Global markets are collapsing
Asian stock markets have followed Wall Street lower amid concerns over the latest variant of the coronavirus and the Federal Reserve’s stricter policy. The Australian S & P / ASX 200 was trading 11 points lower to 7,292. Nikkei plunged 607 points to 27,937 and Shanghai Composite was trading 38 points lower to 3,594. The Hang Seng Index lost 466 points at 22,723. On Wall Street, the S&P 500 finished down 48 points to 4,620, the Nasdaq lost 10 points to 15,169 and the Dow Jones lost 532 points to 35,365.
Omicron enclosures cross the 150 mark
The growing number of Omicron variant cases in the home has also kept sentiment nervous in the Indian market. India reported its 150th case of the new variant of COVID-19 on Sunday, December 19, 2021. The country’s Omicron count jumped to 153 after Maharashtra and Gujarat added ten more infections.
Central banks turn hawkish
Central banks such as the Federal Reserve and the Bank of England have become hawkish by cutting back their bond buyback programs to contain rising inflation. The Bank of England decided to raise interest rates by 15 basis points to 0.25% at its December meeting. The Bank of England is the first central bank to raise interest rates. The US Fed has also indicated that it will hike rates next year. The reduction in the injection of funds by major central banks into their economies amid growing cases of Omicron has baffled traders around the world.
Massive sales by IFIs
Foreign investors have so far sold Rs 26,687 crore of Indian stocks in December against Rs 39,901 crore in November 2021, according to NSE data. Foreign institutional investors (FIIs) remained net sellers in the capital market as they sold shares worth Rs 2,069.90 crore on Friday. The strong outflow from foreign investors resulted in a correction of over 6% in Sensex and Nifty in one month. While Sensex is down 6.81% or 4,060 points, Nifty has lost 6.87% or 1,219 points in one month. Sensex lost 1,774.93 points, or 3.02 percent last week, and Nifty is down 526 points, or 3 percent during the same period amid massive FII sales.
Increase in Omicron cases worldwide
The US government has warned of a possible wave of “revolutionary infections” due to Americans traveling for the Christmas and New Years holidays. In the UK, Omicron cases have increased by 52% in one week.
To date, cases of Omicron have been reported in 89 countries and the number of cases doubles within 1.5 to 3 days in areas of community transmission, the World Health Organization (WHO) said.
Omicron cases are increasing rapidly in countries with high population immunity, but it is not known whether this is due to the virus’s ability to evade immunity, its inherent increased transmissibility, or a combination. of both, the WHO said in an update.