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    Bloodbath on D-Street! Sensex tanks 1,628 points. Top 5 factors behind today's market crash

    Synopsis

    The market capitalisation of all listed companies on BSE declined by Rs 4.53 lakh crore to Rs 370.42 lakh crore. The highest-weighted stock on the benchmark indices HDFC Bank closed 8.5% lower, its highest single-session percentage fall since March 23, 2020, after reporting stagnant margins for the second consecutive quarter. Barring the Nifty IT index, all sectoral indices closed in the red. Nifty IT closed 0.64% higher, boosted by a 3.5% jump in L&T Technology Services after the software services company retained its revenue growth forecast for fiscal 2024.

    Sensex tumbles 1,628 points; Nifty below 21,600; Tata Steel, Kotak Bank slide 4% each
    Tracking negative cues from global peers, Indian benchmark equity indices closed in the deep red for the second straight day on Wednesday, dragged by index heavyweight HDFC Bank after it posted lower-than-expected quarterly results. Metals dropped after China's quarterly growth fell short of expectations.

    The 30-share BSE benchmark Sensex tanked 1,628 points or 2.23% to settle at 71,500. The broader NSE Nifty plunged 460 points or 2.09% to end at 21,572. This is the worst single-day fall in the Sensex in percentage terms in the last 18 months.

    Meanwhile, the market capitalisation of all listed companies on BSE declined by Rs 4.53 lakh crore to Rs 370.42 lakh crore.

    The highest-weighted stock on the benchmark indices HDFC Bank closed 8.5% lower, its highest single-session percentage fall since March 23, 2020, after reporting stagnant margins for the second consecutive quarter.

    Barring the Nifty IT index, all sectoral indices closed in the red. Nifty IT closed 0.64% higher, boosted by a 3.5% jump in L&T Technology Services after the software services company retained its revenue growth forecast for fiscal 2024.

    Nifty Bank and Nifty Financial Services closed over 4% lower, while Nifty metal, realty, oil & gas, and auto closed 1-3% lower.

    Here are top factors aiding the crash:

    1. HDFC Bank drags Indian shares lower

    HDFC Bank alone contributed 235 points to Nifty's 460-point plunge, which is the biggest reason for the fall in the market.

    Shares of HDFC Bank crashed over 7% to the day's low of Rs 1,560 on Wednesday after its December quarter results, where India's largest lender reported higher provisions on the year-on-year basis. Despite a 34% uptick in its net profit, investors appeared unimpressed by the outlook on loan growth and margins by top brokerages.

    Top brokerages like CLSA and Morgan Stanley red flagged loan growth and lower liquidity coverage ratio (LCR) on the HDFC Bank.

    Read More: HDFC Bank shares tank 7% post Q3 earnings. What irked investors?

    2. Decline in global markets

    World stocks fell on Wednesday as markets grappled with a central bank push back against interest rate cut expectations and signs of a patchy economic recovery for China.

    Data showed China's economy grew 5.2% in 2023, slightly more than the official target, but the recovery was far shakier than analysts expected, with a deepening property crisis, mounting deflationary risks and tepid demand casting a pall over the outlook for this year.

    All this made for a gloomy trading session with Asian equities slumping almost 2% to a one-month low, while Hong Kong's stock index dropped over 3%. European shares were down over 1%, while US stock futures pointed to a weak open for Wall Street later on.

    3. Fear of interest rate push back

    Markets priced in a 65% chance of a Fed rate cut in March, according to the CME FedWatch tool, compared with the 81% likelihood at the start of the week.

    Markets are betting on 140 basis points (bps) of rate cuts from the ECB this year - a drop from 150 bps priced on Tuesday - with the first now seen as more likely in April than in March.

    4. Dollar at one-month high

    When the dollar index rises, crude oil and other commodities become more expensive. It increases our import costs and widens our current account deficit.

    The dollar index hovered at a one-month high against a basket of currencies on Wednesday as remarks by Federal Reserve Governor Christopher Waller dampened expectations for a March rate cut.

    Waller said while the US is "within striking distance" of the Fed's 2% inflation goal, the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained.

    5. 10-year Treasury yield rises above 4%

    The 10-year Treasury yield, which tracks expectations of long-term borrowing costs and rises as the price of the debt security falls, climbed to 4.052%.

    "The global negativity will come from the rising bond yields in the US (the 10-year yield is at 4.04 %) responding to concerns that the sharp rate cuts expected from the Fed this year may not materialise. Now indications are that the Fed is unlikely to cut in March and the total cuts in 2024 may not be five or six that the market had partly discounted," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

    (With inputs from agencies)
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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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