Five reasons why Sensex tanked 453 points today

The benchmark indices logged the biggest single day fall in 2 months on Thursday after the Apr-Oct fiscal deficit data, coming in at 96% of the budgeted target for FY18, unnerved investors. The derivatives expiry of November series also hurt sentiment, while investors awaited the September quarter GDP data due later in the day. 

The S&P BSE Sensex ended at 33,149, down 453 points while the broader Nifty50 index settled at 1,226, down 134 points.

"The market started off on a weak note and saw sharp sell-off in frontline index towards the end of the trading session ahead of the GDP data. Negative trend in Asian markets and domestic fiscal deficit data impacted sentiments. However, the broader markets indices outperformed," said Jayant Manglik, President Retail Sales, Religare Securities.

"While the overall sentiment remains positive, some profit-booking cannot be ruled out at higher levels. Thus corrections should be used as a buying opportunity. The market would react to the Q2 GDP data scheduled after market hours. Traders should avoid over leveraging until keys events like the RBI policy and US Fed meet end in the next couple of weeks," he added. 

We have compiled five reasons that may have impacted market sentiment today: 

1) Fiscal deficit 

The markets extended losses soon after the data showed that the country's fiscal deficit in the first seven months of the financial year has exceeded 96 per cent of the government's estimates for full 2017-18. At the end of September this year, the fiscal deficit had stood at 91.3 per cent of the full-year target. 

The fiscal deficit during the April-October period of this year stood at Rs 5.25 lakh crore, compared with Rs 4.2 lakh crore in the same period a year earlier, official data released by the Controller General of Accounts (CGA) showed. 

The data renewed fears that the government may fail to achieve its fiscal deficit target of 3.2% of GDP for FY18. 

2) Q2 GDP expected later today

Investors remained jittery ahead of the release of GDP data for the September quarter. The economic growth, however, is expected to have picked up in Q2, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of Goods and Services Tax (GST).

For July-September, the median in a Reuters poll of economists came in at annual growth of 6.4%. Forecasts ranged from 5.9% to 6.8%.

3) November F&O expiry

The Nifty index settled the derivatives expiry of November series below 10,250 as traders rolled over most futures and options contracts of November series to December series. 

"Nifty futures have seen rollovers of around 63% from November to December series on provisional basis while Bank Nifty has seen rollovers of around 56% on provisional basis," said Chandan Taparia, Derivatives and Technical Analyst at Motilal  Motilal Oswal Securities.

"On the option front, for the December series, maximum and significant open interest is standing at 10,000 strike with outstanding position of around 65 lakh shares while maximum Call OI is at 10,500 strike. Option band signifies lower trading band with expectation of higher market volatility in December series," he added. 

4) OPEC meet

Investors also took cues from the ongoing meeting of the OPEC and non-OPEC oil producers, which look poised to extend output cuts until the end of 2018, a Reuters report said quoting sources. The 14-member OPEC and Russia have signaled that they may review any extension of the deal when they meet again in June if the market overheats, the report said. 

On Thursday, the Brent oil was trading above $62 a barrel, while US WTI crude was around $57. 

5) Global markets

Investors were also unnerved as Asian shares fell on Thursday, weighed down by a plunge in high-flying tech shares on fears that a long boom in micro-chips may have peaked. Most Asian markets closed lower. Japan's Nikkei 225 rose 0.57%, or 127.76 points, to close at 22,724.96. South Korean Kospi index fell 1.45% to end at 2,476.37, while Shanghai Composite edged down 0.61% to finish at 3,317.58 and the Shenzhen Composite lost 0.9% to close at 1,901.86.

(With inputs from agencies)