BSE Sensex, Nifty witness sharp fall as US stock plunge sparks global sell-off

Premier indices in India fell around 3 per cent and mid and small cap indices fell over 5 per cent. This is largely due to a global sell-off on concerns of overheating in the US market and expectations of a rate hike by the Federal Reserve System, the central bank of the United States of America. 

Written by George Mathew | New Delhi | Updated: February 6, 2018 10:49:44 am
BSE Sensex, Nifty likely to witness sharp fall as US stock plunge sparks global sell-off Sensex, Nifty tanked over 3 per cent in opening trade in line with deep losses in world markets. (Express photo by Janak Rathod)

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.

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