Indian equity benchmarks on Tuesday fell sharply as the 30-share BSE Sensex pack slumped 736 points or 1.01 per cent to settle at 72,012. The broader NSE Nifty index moved 238 points or 1.08 per cent down to end at 21,817-level. The correction in domestic benchmarks was due to weakness in consumer, IT, pharma and energy stocks. India VIX, fear index, rose 1.56 per cent to 14.11-level.
Such was the fall in the domestic bourses that around Rs 4.8 lakh crore of BSE market capitalisation (m-cap) was wiped out. Investor wealth, as suggested by the BSE m-cap, fell Rs 4.87 lakh crore to Rs 373.93 lakh crore compared with a valuation of Rs 378.79 lakh crore recorded in the previous session.
Frontline stocks such as Tata Consultancy Services (TCS), Infosys, Reliance Industries Ltd, ITC, L&T, HCLTech, Nestle India, IndusInd Bank, SBI and Axis Bank contributed to the fall today.
Here are the key reasons behind the stock market fall:
Consumer, IT, pharma & energy stocks slump
All the 15 sector gauges -- compiled by the NSE -- were trading in the red today. Sub-indexes Nifty FMCG, Nifty Consumer Durables, Nifty IT, Nifty Pharma and Nifty Oil & Gas were underperforming the NSE platform by falling as much as 2.16 per cent, 1.04 per cent, 2.90 per cent, 2.17 per cent and 1.69 per cent.
TCS dropped more than 4 per cent, the most on the Nifty, on Tata Sons' plan to sell a $1.13 billion stake sale at a 3.7 per cent discount. The counter also weighed on the IT index (Nifty) whose 2.90 per cent slide was the most among the major sectors.
Global cues
The US rate-sensitive IT stocks have dropped 3.3 per cent this week as expectations of a Federal Reserve rate cut have receded due to recent hotter-than-expected inflation print.
Asian markets were also down ahead of the Fed decision, holding their losses even as the Bank of Japan ended eight years of negative interest rates.
"In the near-term, a change in the global market construct will happen if the Fed sends a hawkish message stronger than market expectations. This cannot be ruled out since the declining trend in US inflation has been arrested in the last two months. Investors may wait for clarity to emerge on the Fed response tomorrow," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Crude oil prices
Oil prices traded near four-month highs today. The Brent crude oil futures contract for May delivery was down 15 cents to $86.74 a barrel, while US West Texas Intermediate (WTI) prices were down 9 cents to $82.07.
The gradual increase in crude oil prices is further dampening market sentiment, said Vinod Nair, Head of Research at Geojit.
FII data
Foreign institutional investors (FIIs) sold Rs 2,051.09 crore worth of shares on a net basis during the previous session, while domestic institutional investors (DIIs) bought Rs 2,260.88 crore worth of shares, exchange data showed.
Nifty outlook
"Nifty has fallen below the critical short-term moving average, indicating a weak momentum. Key levels to watch include resistance at 22,000 and support at 21,800. A drop below 21,700 could lead to further correction in the index," said Rupak De, Senior Technical Analyst at LKP Securities.