Stock Markets in India and across the world tumbled Tuesday after steep losses on Wall Street slashed the Dow Jones industrial average by 4.6 per cent, its biggest loss in six-and-half years. As the Sensex sunk by 1,275 points at one stage, amid lingering concerns over the RBI’s monetary policy to be announced Wednesday, an estimated Rs 2.7 lakh crore of wealth was wiped out in the day’s session. The benchmark managed to recover partially and close with a loss of 561 points at 34,195.94.
By late Tuesday, the battered Dow Jones also showed signs of stabilising with the index staging an intra-day rally of around 600 points at one stage before giving up the gains in volatile trading. By 11.45 pm IST, the Dow was up by 93 points, or 0.38 per cent, at 24,438.88.
Earlier, as investors fretted over rising bond yields and the interest rate hike in the US, the Dow suffered its worst fall by points in history, wiping out all its gains this year.
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“While the concern over the LTCG (long-term capital gains) tax continues, the correction on Tuesday was driven more by a spike in global bond yields,” said Vaibhav Agrawal, head of research, Angel Broking. “There were precautionary calls for early margins but that was more a measure of caution and there was no trace of panic in the market,” he said.
Opening on a weak note, the Sensex plunged below the key 34,000-mark in the morning session while the NSE Nifty plunged 390 points within minutes of opening. However, value-buying emerged at several counters during the late afternoon session. The Sensex finally ended at 34,195.94, down 561.22 points, or 1.61 per cent.
The 50-share NSE Nifty also closed lower by 168.30 points, or 1.58 per cent, at 10,498.25. The Nifty at one stage touched a low of 10,276.30 and a high of 10,594.15.
With this, the Sensex has now lost 1,769 points since the Budget on February 1, which imposed a 10 per cent long-term capital gains tax on equities and projected a higher fiscal deficit than earlier targeted.
Vinod Nair, head of research, Geojit Financial Services, said, “The global selloff due to the spike in global bond yields has resulted a kneejerk reaction in the domestic market. We are seeing an extended impact in the domestic market post the LTCG and fiscal deficit turmoil. However, towards close, the market recouped some losses led by value buying on account of earnings growth expectations. Anxiety about the RBI policy and global market movement may influence investors to stay sideline.”
Elsewhere, Japan’s Nikkei fell 4.73 per cent, Hong Kong’s Hang Seng lost 5.12 per cent, while Shanghai Composite Index shed 3.35 per cent. European shares, too, were in bad shape in their opening deals. Frankfurt’s DAX fell 1.97 per cent, Paris CAC lost 1.75 per cent and London’s FTSE shed 1.73 per cent.
Foreign portfolio investors (FPIs) sold shares worth Rs 1,263 crore, while domestic institutional investors (DIIs) bought shares worth a net Rs 1,163 crore Monday. Tata Motors emerged as the worst performer by crashing 5.45 per cent, followed by TCS at 3.58 per cent. Sector-wise, the BSE IT index fell the most at 2.80 per cent.
Consumer durables, tech, realty, healthcare, FMCG, PSU, auto, metal, power, oil and gas, bankex and infrastructure stocks remained under pressure. Small-cap and mid-cap indices lost 2.19 per cent and 1.68 per cent, respectively.
“The two per cent fall in the Nifty at close may appear to be quite steep but it is actually an improvement considering that the Nifty touched an intraday low of 10,276 before closing the day at 10,498. The crack was obvious in the SGX Nifty in early trades after the Dow fell by more than 1000 points on Monday and the Nikkei fell as much as 7 per cent during trades. Global markets were a sea of red and Indian markets started off with a huge overhang,” Agrawal said.
According to Jayant Manglik, president, Religare Broking, Indian markets showed signs of recovery in the afternoon session. “We believe one should remain cautious with so much volatility in the market due to global sentiments — global indices and bond yields — and implementation of long-term capital gains tax (LTCG) in the Union Budget. All eyes will be on the RBI monetary policy, which is expected to keep rates unchanged.”