Extending its losses, the domestic equity market crashed over 1.50 per cent on Thursday. The S&P BSE Sensex shed 572 points or 1.59 per cent to settle at 35,312.13 while NSE’s Nifty50 index settled at 10,601, down 182 points or 1.69 per cent. The market witnessed across-the-board selling with realty, auto and IT stocks falling the most. Industry heavyweights Reliance Industries (RIL), HDFC, Infosys and Maruti were the biggest contributors to the Sensex's 572-point slide.
Capital markets had a rough day, as they are trying to navigate too many data points such as re-emergence of sharp weakness in Indian rupee, upcoming OPEC meeting outcome in terms of production cut, and upcoming results of 5 state assembly elections. The nervousness is quite evident, as there is sharp sell–off across the industries, and especially in those stocks where there are corporate governance concerns, said Jagannadham Thunuguntla, Senior Vice President and Head of Research (Wealth) at Centrum Broking.
"We feel investors should be ready with shopping-list of stock ideas, as markets can surprise on upside if macros stabilize, and election results come out palatable to markets," Thunuguntla added.
Here’s a look at the key factors that dragged market lower on Thursday –
Global sell-off: Investor sentiment took a major hit following rout in US stock futures and Asian shares after Canadian authorities arrested the chief financial officer (CFO) of Chinese tech giant Huawei for extradition to the United States, igniting fears of renewed tensions between the two biggest economies. S&P500 e-mini futures fell as much as 2 per cent during the day while Japan's Nikkei shed 1.9 per cent, closing at its lowest level since October 30, with semi-conductor related shares leading the losses, Reuters reported.
Rupee slips again: The rupee once again slipped back to 71 level against the US dollar on Thursday amid strengthening American currency. Forex traders said the strength of the US dollar against other overseas currencies and foreign fund outflows weighed on the local unit. That apart, Fitch Ratings today projected rupee to fall to 75 to a dollar by end of 2019, on widening of current account deficit (CAD) and tighter global financing.
Fitch cuts India's growth forecast: Fitch Ratings revised downwards India's GDP growth forecast to 7.2 per cent for current fiscal citing higher financing cost and reduced credit availability. For 2019-20 and 2020-21 financial years, growth projections have been revised to 7 per cent and 7.1 per cent, respectively. In June, it had projected India to grow at 7.4 per cent in current fiscal and 7.5 per cent in 2019-20.
FIIs in exit mode: Foreign investors sold 54.20 billion from capital markets on Wednesday, data available with NSE showed. FIIs have been net sellers of more than Rs 9.30 billion in December 2018, according to an ICICI Direct report.