Sensex dives 790 points, Nifty barely holds 21,950: Key reasons behind the fall

Indian equity benchmarks on Wednesday fell sharply as the 30-share BSE Sensex pack slumped 790 points or 1.08 per cent to close at 72,305. The broader NSE Nifty index moved 247 points or 1.11 per cent down to settle at 21,951 level. The correction in domestic benchmarks was due to weakness in banks, energy, realty, media and automobile stocks. India VIX, fear index, jumped 3.83 per cent to 16.33-level.

Such was the fall in the domestic bourses that around Rs 6 lakh crore of BSE market capitalisation (m-cap) was wiped out. Investor wealth, as suggested by the BSE m-cap, fell Rs 6.04 lakh crore to Rs 385.95 lakh crore compared with a valuation of Rs 391.99 lakh crore recorded in the previous session.

Frontline stocks such as Reliance Industries Ltd, ICICI Bank, HDFC Bank, PowerGrid, M&M, Maruti, L&T, Kotak Mahindra Bank, Asian Paints, IndusInd Bank and SBI contributed to the fall today.

Here are the key reasons behind the stock market fall:

• Bank, energy, media, realty & auto stocks tank

All the 15 sector gauges -- compiled by the NSE -- closed in the red. Sub-indexes Nifty PSU Bank, Nifty Oil & Gas, Nifty Media, Nifty Realty and Nifty Auto were underperforming the NSE platform by falling as much as 2.30 per cent, 2.08 per cent, 3.46 per cent, 2.11 per cent and 2 per cent, respectively.

• Global cues

Most Asian shares settled lower ahead of key US economic data. Investors are awaiting the US Federal Reserve's preferred measure of inflation, the core personal consumption expenditures (PCE) price index, due on Thursday, as they seek clues on the timing of the first rate cut.

• Q3 GDP data

Back home, market participants awaited October-December quarter's gross domestic product (GDP) data, also due on Thursday, for more cues. Back home, market participants awaited October-December quarter's gross domestic product (GDP) data, also due on Thursday, for more cues. "Profit booking weighed on Indian markets, fuelled by concerns about India's Q3 GDP growth potentially slowing to 6.6 per cent from 7.6 per cent in Q2," said Vinod Nair, Head of Research at Geojit Financial Services.

• FII data

Foreign institutional investors (FIIs) sold shares worth Rs 1,509 crore during the previous session, while domestic institutional investors (DIIs) bought shares worth Rs 2,862 crore.

"Market is likely to be in a range-bound zone in the near term. FIIs have sharply reduced their selling this month and have turned buyers to the tune of Rs 872 crore in the cash market, so far in February, despite the high US bond yields. This indicates that FIIs are unlikely to press big selling pulling the market sharply down," said VK Vijayakumar, Chief Investment Strategist at Geojit.

• Nifty outlook

"Nifty underwent a sharp correction during the day amid a strong sell-off. A decline below 21,950 could potentially trigger a correction towards 21,800 in the near term. Conversely, a sustained trade above 21,950 might spur a recovery in the index towards 22,100," said Rupak De, Senior Technical Analyst, LKP Securities.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

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