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Five factors that pulled down Sensex over 600 points today

The bears hijacked the proceedings on Dalal Street on Friday, dragging equity benchmarks Sensex and Nifty close to 2 per cent.

The Nifty slipped below the 10,300 mark as 39 of its constituents dropped up to 14 per cent. Indiabulls Housing Finance and YES Bank led the index losers.

At 1357 hours (IST), the 50-share index was down 193 points while the 30-share BSE Sensex fell 622 points to 34,157.

Going by the buzz on Dalal Street, here is a list of five factors that are dragging the market.

Fed worries: Subdued global cues
Weak global cues weighed market sentiment. All Asian markets traded in the red, as higher US interest rates, growth concerns in China and global trade tensions weighed on investors’ risk appetite. The US market ended sharply lower, on worries over global growth and investors continued to weigh minutes of the Federal Reserve’s September meeting, which were viewed as hawkish. In overnight trade Dow closed 1.27 per cent, or 327 points, down at 25,379 on October 18.

Foreign money outflow
Foreign investors have pulled out over Rs 20,000 crore from the domestic markets so far in October amid an unabated fall in the rupee and rising crude oil prices and a spike in US treasury yields.

Double whammy of trade deficit & rupee fall
Traders were cautious after SBI Economic Research said the rupee depreciation has neither helped improve exports nor slowed imports, leading to an incremental trade deficit of $4 billion in the first half of the financial year. Exports entered the negative zone after five months, contracting 2.15 per cent in September to $27.95 billion due to a dip in shipments in key sectors, including engineering and gems & jewellery segments, even as trade deficit narrowed to a five-month low. Imports grew 10.45 per cent in September to $41.9 billion, according to commerce ministry data released Monday. The local currency depreciated over 15 per cent on a year-to-date basis till October 17.

Selling in heavyweights
Market participants appeared disappointed with second quarter earnings of oil-to-telecom behemoth Reliance Industries (RIL). The scrip slipping 5 per cent in morning trade to Rs 1,091. Among others Infosys (down 3 per cent) and YES Bank (7 per cent) also lost significant weight. HDFC, ITC and Asian Paints capped some of the downside. On Wednesday, RIL posted a record quarterly profit for Q2FY19, helped by strong profit from its petrochemicals and telecom businesses. However, its gross refining margin, or profit earned on each barrel of crude processed, fell to a three-and-a-half-year low at $9.50 a barrel.

Domestic growth worries
Sentiments were dampened after CLSA signalled an impact on economic growth due to current tightness in the credit market, though the impact is unlikely to remain way beyond the next two quarters, notwithstanding the cautious view on the domestic equity market.
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