Indian stock markets joined the global equity sell-off on Tuesday with the Sensex plummeting by over 1,000 points, or three per cent on Tuesday morning after the Dow Jones Industrial Average of Wall Street plunged by 1,175 points, its largest single-day points drop in history, on Monday.
Opening sharply down, the benchmark Sensex traded at 33,591.50, down 1,165 points, at 10.15 am. The wider NSE Nifty Index was down 358.95 points at 10,307.60 as the newfound volatility shattered what had been a long period of stability and rising valuations. Most stocks were sharply down, bringing down valuations. TRACK Markets LIVE updates
The Wall Street sell-off was triggered by rising US Treasury yields which fanned fears of interest rate hike quicker than thought and a spike in inflation. Other Asian markets also plunged. Japan’s Nikkei fell 5.26 per cent, Korea’s Kospi 2.98 per cent and Hang Seng of Hong Kong by 4.3 per cent. READ: Wall Street plunges, S&P 500 erases 2018’s gains
The Sensex has fallen nearly 2,200 points after the Budget presentation. On February 2, a day after Finance Minister Arun Jaitley in his Budget proposal slapped 10 per cent long-term capital gains tax on equities and projected a higher fiscal deficit, worried investors dumped stocks across the board and Sensex fell 84 points.
Investors read the projected fiscal deficit of 3.5 per cent of GDP for the current fiscal against the earlier target of 3.2 per cent and 3.3 per cent for the next fiscal and rising bond yields as deterioration in the government’s finances, raising the spectre of a spike in interest rates. Indian bond yields were also rising, raising fears of a hike in rates by the RBI. READ: Post-Budget uncertainty, global cues drives market selloff
The Dow’s 4.6 per cent decline in value was the most substantial since 2011. However, it was still less severe than declines during market-rocking events like the 2008 financial crisis, when the Dow shed 7 per cent of its value in its worst single-day hit.