Investors lose Rs 2.5 lakh crore: Key factors behind the market crash today

The Indian market was trading in the red in the afternoon session today amid mixed global cues. Sensex fell 646 points to 55,028 and Nifty lost 187 points to 16,381. During the session, Sensex tanked 793 points to 54,882 and Nifty lost 222 points to 16,347. With today's crash, Sensex is down 5.54 per cent or 3,225 points and Nifty has slumped 968 points or 5.58 per cent in 2022.

On the other hand, Sensex has gained 5.13 per cent or 2,686 points and Nifty has climbed 4.05 percent or 638 points in a year. Market cap of BSE-listed firms fell to Rs 253.87 lakh crore today against Rs 256.41 lakh crore market cap in the previous session, translating into a loss of Rs 2.54 lakh crore. Amid the ongoing volatility, the equity market is struggling to make a steady move and find a definite direction in the near term.

Here's a look at factors which dragged the benchmark indices in trade today.

Global markets

Asian stock markets were mixed after a bond sell-off on Wall Street fueled anxiety about a possible US economic slowdown and Australia raised interest rates. The Nikkei in Tokyo gained 0.4% to 28,032.94 while the Hang Seng in Hong Kong shed 0.5% to 21,544.06. The Shanghai Composite Index advanced 0.2 per cent to 3,243.17 after Chinese authorities eased anti-virus restrictions that shut down businesses in Shanghai and other major cities.

Share Market update: Sensex falls 567 pts, Nifty below 16,450; Titan, Dr Reddy's top losers

Crude oil rates soar

Benchmark US crude rose 62 cents to $119.12 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined 37 cents the previous day to $118.50. Brent crude, the price basis for international oil trading, gained 56 cents to $120.07 per barrel in London. It fell 21 cents in the previous session to $119.51. The rise in crude oil prices comes after Saudi Arabia raised the official selling price (OSP) for its flagship Arab light crude to Asia to a $6.50 premium versus the average of the Oman and Dubai benchmarks, up from a premium of $4.40 in June.

Investors turn cautious ahead of RBI meet outcome

Investors have turned cautious ahead of the outcome of the ongoing RBI monetary policy meet tomorrow. They are also tracking RBI's take on inflation.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "Even if the rate hike is by a steep 50 bps, the market is unlikely to be impacted much since frontloading of the rate hike will be more effective in anchoring inflation expectations. The market direction is likely to be influenced more by the inflation in the US, which, in turn, will decide how far the Fed will go in raising rates. This will be the key determinant of possible 'risk on' or 'risk off' in equity markets globally."

Expert take

Sharad Chandra Shukla, Director of Mehta Equities said, "Markets expect further tightening in the monetary policy to tackle inflation. A likely 40-50 bps increase in key rates is expected on account of higher commodity prices, high food and core inflation. With CPI hovering at highs, we expect RBI will think of revising inflation target to a more realistic based on ground realities which can be beyond 6-7 per cent this would be attributed to the ongoing war after effects and impacts on input costs as well as disturbance on supply chain management. We assume RBI will be more focusing on controlling inflation and growth won't be the priority at this juncture and likely to keep the GDP forecast unchanged."