Sensex Falls 1000 Points: 3 Key Reasons for Market Crash

Aakhir Tak – In Shorts

1. The Sensex fell sharply, dropping nearly 1000 points.
2. The Nifty also declined, hitting its intraday low at 24,394.20.
3. The upcoming US Federal Reserve meeting is causing investor caution.
4. India’s widening trade deficit is putting pressure on the rupee.
5. Weak performance of heavyweight stocks contributed to the market decline.

Aakhir Tak – In Depth

Sensex Falls 1000 Points: 3 Key Reasons for Market Crash

Stock markets plunged in early trade on Tuesday, with the Sensex plummeting by nearly 1000 points to an intra-day low of 80,806.64. The NSE Nifty50 also dropped 274 points to reach its lowest point of the day at 24,394.20. This decline occurred amid investor caution ahead of the US Federal Reserve’s meeting scheduled for December 18. Despite the downturn in the main indices, midcap and smallcap stocks performed relatively better, with both Nifty Midcap and Nifty Smallcap falling only 0.06%.

There are three key reasons behind this market crash. Firstly, the US Federal Reserve meeting on December 18 is being closely watched by global markets. While markets have already factored in a 25 basis points rate cut, investors are keen to hear the Fed chief’s comments on the future path of interest rates. Any unexpected move or statement could negatively impact global markets. Secondly, India’s trade deficit for November surged to $37.8 billion, putting pressure on the Indian rupee. The rupee is expected to move towards Rs 85 per dollar, which benefits exporters like IT and pharma companies, but increases costs for importers. Thirdly, the weak performance of heavyweight stocks such as Reliance Industries, HDFC Bank, and Infosys significantly contributed to the market decline.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained the reasons behind the decline, stating, “Global markets are waiting for the US Federal Reserve’s comments. If the Fed takes a less supportive stance, it could hurt market sentiment. However, this is unlikely.” He also added, “India’s widening trade deficit is also a major concern. A weaker rupee will help exporters like IT and pharma firms, but for importers, it increases costs. This has started to reflect in stock prices.”

The Sensex experienced a broad sell-off, with 29 out of its 30 stocks trading in the red. Adani Ports was the only gainer on the index. Major stocks such as HDFC Bank, Reliance Industries, ICICI Bank, Bharti Airtel, and Larsen & Toubro were among the top losers of the day. On the NSE Nifty50, only four stocks – Adani Ports, Cipla, Adani Enterprises, and Tata Motors – managed to stay in the green, while the other 46 stocks declined. The biggest losers on the Nifty50 included Shriram Finance, Bajaj FinServ, Grasim Industries, Bharti Airtel, and PowerGrid.

Sectoral indices reflected the overall market weakness. Nifty Bank, Nifty Financial Services, and Nifty Oil and Gas each fell over 1%. Sectors such as Nifty Auto, Nifty FMCG, Nifty IT, and Nifty Metal also ended the day with losses of more than 0.5%. However, Nifty Media and Nifty Realty bucked the trend, managing to gain nearly 1% each. The FMCG sector showed mixed trends. Some stocks like Umang Dairies, Nakoda Group of Industries, and LT Foods managed to gain between 1% and 5%, while major FMCG stocks like Emami, Patanjali Foods, Britannia Industries, and Colgate-Palmolive saw declines of more than 1%.

Aakhir Tak – Key Takeaways to Remember

The Sensex fell nearly 1000 points due to three main factors: the US Federal Reserve meeting, India’s rising trade deficit, and the poor performance of heavyweight stocks. The Nifty also experienced a decline. The market faced broad selling pressure.

Aakhir Tak Editor-in-Chief

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