Market bleeding continues for fifth straight day; Nifty down 1.4%

Indian markets declined for the 5th straight session on Wednesday on the back of weak global trends, a rise in the dollar index, a weakening rupee, and continuous foreign investor selling. The Sensex fell 1,015.53 points or 1.3 percent to the day's low of 77,659.65 while the broader Nifty lost 338 points or 1.4 percent to its intra-day low of 23,545.50.

Both benchmarks are over 10 percent away from their respective record highs, hit in September. Just in these five sessions alone, the indices have lost almost 4 percent.

Sensex settled 984.23 points lower at 77,690.95 while the broader Nifty ended 324.4 points lower at 23,559.05

Broader markets underperformed the benchmarks with the Nifty Midcap and Nifty Smallcap indices declining over 2.5 per cent each.

"The Trump victory has added an element of high volatility to markets. From the emerging market perspective, the rise in the dollar index and the sharp spike in the US 10-year bond yield to 4.42% are causes of concern. Such high yields in US bonds will facilitate more outflows from emerging markets to the US. This will continue to be a headwind for India," V K Vijayakumar of Geojit Financial Services, pointed out.

Investors should be cautious in investing in sectors like cement, metals, and petroleum refining which are facing a growth slowdown, said Vijayakumar. Safety is in sectors like banking, new-age digital companies, hotels, pharma, and IT where growth prospects are good, he said.

Sectors and stocks

In the Sensex pack, only four stocks were in the green - Tata Motors, NTPC, Asian Paints and Infosys- while the remaining 26 traded in the red. M&M, Tata Steel, Adani Ports, JSW Steel, and IndusInd Bank were the top losers.

All sectoral indices were in the red for the day. Nifty Realty shed the most 3.2 percent followed by Nifty PSU 3 Bank, which lost 2.2 percent, and Nifty Metal, down 2.66 percent. Meanwhile, Nifty Bank, Nifty Auto, and Nifty Media also fell over 2 percent each. Nifty Financial Services, Nifty Pharma, and Nifty Oil and Gas also declined by over 1.5 percent each. Nifty IT and Nifty FMCG fell the least, down 0.5 percent each.

4 reasons behind recent stock market crash

Here are four reasons behind the stock market crash:

Weak rupee: The rupee depreciated by 1 paisa, reaching a historic low of 84.40 against the US dollar in early trading on Wednesday. Persistent foreign fund outflows and a strong dollar weighed on the currency. Forex traders observed significant volatility in the USD-INR pair, with the rupee edging closer to its all-time low. An SBI research report released earlier this week predicts that the rupee could depreciate by 8-10% against the US dollar amid Donald Trump's return to the White House

Dollar surges: The dollar index surged by 1.8% in November, following the impact of Donald Trump’s victory in the U.S. election. It reached 105.98, the highest level since July, exerting pressure on emerging market currencies. The rise in the dollar index and the sharp spike in US 10-year bond yields to 4.42% are a cause of concern as high yields in U.S. bonds are likely to drive further outflows from emerging markets to the U.S.

Continued FPI selling: Foreign Portfolio Investors (FPIs) continued their selling spree for the 32nd consecutive session, offloading shares worth ₹364.35 crore on Tuesday, bringing total outflows for November to ₹23,911 crore. October saw a major exodus of ₹1.14 lakh crore worth of Indian stocks, as concerns over extreme valuations, slower-than-expected earnings, and weak economic indicators dampened investor sentiment. Meanwhile, China's recent stimulus measures are attracting foreign investors, shifting their focus from Indian markets to Chinese stocks.

Delay in rate cuts: While central banks globally, including the US Federal Reserve, have begun reducing interest rates, the Reserve Bank of India (RBI) has kept rates unchanged. Inflation remains a key concern, with rising food prices due to the extended monsoon and crop damage. The rupee's depreciation further exacerbates the situation, increasing import costs and potentially driving inflation higher. October’s inflation data, released on Tuesday, showed a 6.21% rise in retail inflation, breaching the RBI’s upper tolerance limit of 6% for the first time in over a year.

(By arrangement with livemint.com)