A Massive fall in BSE Sensex-slight by more than 800 points, has invoked a lot of emotion in the investors. Despite a heavy night, Nifty50 also managed to close at some levels around the 23,700 mark. A wide variety of reasons, both domestic and external, worked against the market as a whole to contribute to this fall.

Reasons of fall

The below points capture some of the main reasons for the fall in BSE Sensex today:

• Foreign Institutional Investor (FII) Outflows- BII outflows have added much to the already negative market situation. Investors lost confidence as reports confirmed that FIIs sold off Indian equities worth Rs 2,306 crores.
• Disappointing Quarterly Result- The earnings season turned out not as per market expectations with number of key stocks including NTPC, HDFC Bank, Asian Paints, SBI, Tata Motors, and Maruti Suzuki giving results poorer than expectations. This has directly marred investor sentiments and brought the Fall in Sensex.
• Higher Inflation Hopes: Rates of inflation have only continued to worsen. October saw inflation reaching a record high in 14 months. This led to speculation regarding the activity that the Reserve Bank of India (RBI) will carry out probably tightening monetary policy to keep inflation under control.
• Global Trends: The downward trend of the global market, especially in the Asian markets and the companies belonging to technology in China, also bears a negative print on the Indian market these days. The interconnectedness of global markets assures that negative trends will have a ripple effect, thus impacting investor confidence here.
• Rupee Woes: The rupee has now dropped to an all-time low against the dollar, hitting another nail on the sentimental coffin of the market. The increasing rupiah price affects imports and raises inflation and eventually weighs heavily on the real economy and stocks.

Market View

• BSE Sensex: The Sensex closed at 78,675, down 821 points or 1.03%.
• Nifty50: The same fate was given to the Nifty50 index, closing at 23,883 low 258 points or 1.07% down.

Sectoral Effects

Sectors responded this way to the decline in the BSE Sensex:

• Banking and Financial Services: Banks and financial institutions were the hardest hit as HDFC Bank, SBI among other stock remained battered.
• Automobile: The auto sector also posted a decline with Tata Motors, Maruti Suzuki being among those that reported negative growth.
• IT and Tech: In the IT sector, mixed reactions were evidenced despite the global tech stocks trend contributing to the cautious outlook.

Words from the Analyst

Market analysts have expressed their views toward the current market situation. He said that the continued FII-induced selling pressure has been an important factor contributing to the market downfall. Nair, head of research at Geojit Financial Services, has also added that the market’s fears have been compounded by strengthening the US- dollar and also aggressive policies.

On the horizon

Investors should remain informed and careful with global economic indicators and specific earnings reports. In the coming weeks, the recommendations of the RBI policy and the direction of the global market will be among the main determinants for the attitude of the market.

Thus, today’s substantial decline in the BSE Sensex makes it all the more relevant to watch global and domestic factors alike. Investors should stay tuned and make appropriate decisions in these volatile market conditions.