Sensex crashes over 1,900 points dragged by bank stocks as markets log worst day in 11 months
The drop came after rising US bond yields sparked a sell-off in global equities.
Equity markets witnessed a massive slump on Friday ahead of the release of Gross Domestic Product growth numbers for the third quarter. The 30-share BSE Sensex slipped 1,939.32 points (-3.80%) to finish at 49,099.99, while the broader 50-share NSE Nifty shed 568.20 points to close at 14,529.15.
The widespread selloff in the markets market the worst single-day session in 11 months, according to NDTV. In intra-day trading, Sensex crashed up to 2,149 points, while Nifty cracked under the psychological mark of 14,500. However, both indices managed to pare some gains by the closing bell.
All sectoral sub-indices finished with losses, as Nifty Bank and Nifty Financial Services bled the most, at 4.78% and 4.93%, respectively.
ONGC, Mahindra & Mahindra, Axis Bank and Kotak Mahindra Bank were among the stocks which lost the most. A number of other major stocks from the automobile and private banking sector were among the top losers.
“The sell-off in the US market yesterday [Thursday] was the market’s response to 10-year yield touching 1.6%,” Chief Investment Strategist at Geojit Financial Services VK Vijayakumar told Mint. “The Fed’s interpretation of the rising yield is that it is discounting better growth prospects while the market typically discounts stock prices at a lower PE [private equity] when interest rates rise. Fed’s declared commitment to inject liquidity and keep rates low through 2023 can ensure a buoyant market this year.”
The impact of the US bond yields also affected Asian markets. China’s Shanghai SE Composite Index ended the day 2.12% lower than the previous day’s close, while Hong Kong’s Hang Seng was trading 3.43% lower. Japan’s Nikkei 225 ended the day’s trade 3.99% lower, and Taiwan’s TSEC 50 Index closed after falling by 3.03%.
The Indian rupee also recorded a significant fall of 67 paise, and slipped below the 73 per US dollar mark. This was caused by weak Asian currencies, and sharp selling in the domestic equities. As of 12.58 pm, the rupee was trading at Rs 73.10 – as much as 0.5% higher than the previous closing.