Sensex Crash: Why Is The Stock Market Down Today?

Sensex Crash: Why Is The Stock Market Down Today?

A sharp selloff of 1,100 points in Sensex and across the board selling rung stocks evacuated the wealth of investors worth 5 lakh crore in 13.05.2022 trade, along with their losses that mounted to 34 lakh crore since the highs of April 11. This latest Sensex crash left the investors and the stock market in shock. If you are willing to know what happened on the stock market today, then keep on reading this article.

Sensex Crash: What Actually Happened?

As per the data, the market capital of BSE (Bombay Stock Exchange) fell by Rs 5.26 lakh crore to Rs 241.05 lakh crore from Rs 246.31 lakh crore in the last session. The market cap of BSE Sensex on April 11 stood at Rs 275.17 lakh crore. 

Marking their worst day in more than a week, the 30 share pack Sensex stood lower for the fifth consecutive session, down 1,158 points or 2.14% at 52,930. Its higher peer NSE (National Stock Exchange) decreased by 359 points that totaling to 2.22% to close between the 15,850 mark. This is not the end of the Sensex crash. The fifty pack Nifty has lost 5% in the previous 5 sessions and it closed at its all time lowest levels since July last year. 

The data on Inflation that was released by the US overnight sent all the domestic indexes tumbling on the last day. The US CPI print saturated to 8.3% in April in comparison to 8.5% in March but was still greater than the estimations made by the analysts of 8.1%, implicating that while inflation in the largest economy across the globe has reached its heights, any furthering relaxations would be a slow step and that an aggressive Fed approach may prevail.

Sensex Crash: Market Movers

45 out of 50 index stocks in this Sensex crash ended with cuts, along with Adani Ports, Tata Motors, IndusInd Bank, and Hindalco residing in the ranges close to 4-6% each. Motors, Wipro, Eicher HCL Tech, and TCS managed to finish with positive impacts.

All sectoral indices completed in red, along with metals, banks, auto, capital goods, oil and gas, FMGC, power, pharma, and reality indices residing between 1% to 4%. The breadth of the market firmly favored losses as the advance decline ratio of NSE (National Stock Exchange) was at 2:9. Nearly 760 shares advanced, 86 shares were unaltered, 2601 decreased, nearly 112 stocks hit their upper circuit limits, while stocks close to 533 touched the lower circuits.

Key Factors Responsible For Sensex Crash

The Nifty, Benchmark stock indexes and Sensex crash caused a decline of over 6% this month, weighed down by the sudden increase in interest rate by the Reserve Bank, foreign fund drains, and mixed corporate outcomes. According to Kranthi Bathini, director of equities strategy at WealthMills Securities,

"For Indian markets, inflation and the Reserve Bank of India's unexpected rate increase has created some kind of nervousness."

Mahindra and Reliance Industries were among the top names on the Nifty 50 index, decreasing 1% and 3% respectively. But what is the reason for this Sensex crash? Let us find the reason for market fall today. Also the same happened to the cryptocurrency market. So if you are wondering why crypto market crash today, the same reason applies.

US Inflation Decreases Less Than What Was Anticipated

The data on Inflation that was released by the US overnight sent all the domestic indexes tumbling on the last day. The US CPI print saturated to 8.3% in April in comparison to 8.5% in March but was still greater than the estimations made by the analysts of 8.1%, implicating that while inflation in the largest economy across the globe has reached its heights, any furthering relaxations would be a slow step and that an aggressive Fed approach may prevail. 

The headlines of Wednesday in the United States were supposed to be that inflation peaked this March, not leveled, Edward Moya, senior market analyst at OANDA stated in an overnight note. He said,

"The month-over-month core reading surging from 0.3% to 0.6% should make some Fed members feel uneasy about raising rates only by half a point at the next meeting. Wall Street thought it was going to be done with inflation rearing its ugly head but that does not appear to be the case."

Dollars Increase, Asia Markets Decrease

The dollar remained near a two decade high following the reading of the inflation in the United States, hurting evolving market equities. The dollar index, which scales the greenbacks against a basket of six big global currencies, stood at 103.92. 

Most of the Asian stocks were also trading in the red. The MSCI index of Asia Pacific shares beyond Japan decreased by 0.92%. Nikkei of Japan decreased 1.01% while the Kospi of South Korea edged 0.36% lower.

Prevailed FPI Outflows

Provisional data recommended that FPI (Foreign Portfolio Investors) were net sellers of the domestic stocks to the tune of Rs 3,609.35 crore on Wednesday. The outflows of FPI have touched Rs 17,403 crore this May and Rs 1,44,565 crore in 2022 as of now. According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services,

"With dollar index at 104 and expected to strengthen further, FIIs are likely to continue selling till Indian valuation becomes attractive. Even though DII buying is more than FII selling now, that is not enough to lift sentiments in the market since the macro headwinds are strong."

All Focus On India CPI Reading

The day would witness the release of the April CPI reading of India, which unlike the United States may increase over the last reading. According to Nirmal Bang Institutional Equities, CPI inflation is likely to increase to 7.4% in April from 6.95% in March, led by higher values of fuel and edible oil and a gradual pass through of increase in input costs to retail values, along with inflation in the service industry,m catered by the opening up of the economy.

Conclusion

On Thursday, there was a huge Nifty and Sensex crash. Both these markets tumbled nearly 2%. The Indian rupee also hit an all time low before the domestic retail inflation numbers and amidst a wider decrease in equity markets following the US consumer price data. The Sensex today faces the same crash. The above article talks about the biggest stock market crashes by percentage and also the reason behind them. 

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Yaseer Rashid

Yaseer Rashid got a degree in Journalism and worked as a freelancer. Later he joined News Magnify as a Business and stock writer.

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