5 Reasons Why Sensex Crashed 1,546 Points Today

Mon, 24 Jan Closing

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Indian share markets witnessed heavy selling pressure today and ended deep in the red.

The sell-off continued for the fifth straight session today with benchmark indices losing nearly 3% each.

Panic selling due to the uncertainty around the quantum of a rate hike by the US Fed spooked the markets. Besides, geo-political tensions between Russia and Ukrain, rising dollar index, and surging oil prices and bond yield added to the woes.

At the closing bell, the BSE Sensex stood lower by 1,546 points (down 2.6%).

Meanwhile, the NSE Nifty closed lower by 468 points (down 2.7%).

Cipla and ONGC were among the top gainers today.

JSW Steel and Tata Steel, on the other hand, were among the top losers today.

The SGX Nifty was trading at 17,057, down by 580 points, at the time of writing.

The broader market also witnessed sell-off.

The BSE Mid Cap index and the BSE Small Cap index ended down by 3.8% and 4.4%, respectively.

On the sectoral front, realty stocks, metal stocks and consumer durables stocks were among the hardest hit.

Shares of Adani Transmission and Cholamandalam Investment hit their respective 52-week highs today.

Asian stock markets ended on a mixed note today.

The Hang Seng ended down by 1.2%, while the Shanghai Composite ended on a flat note. The Nikkei ended up by 0.2% in today's session.

US stock futures are trading on a weak note today with the Dow Futures trading down by 470 points.

The rupee is trading at 74.56 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.6% at Rs 48,528 per 10 grams.

Here are 5 Factors Behind Today's Market Crash

FPIs sell-off and rising crude oil prices: Foreign Institutional Investors (FIIs) pulling out money from the Indian markets, and crude oil prices shooting up for the past few months have added to worries.

Geopolitical conflict: Fear of a potential invasion of Ukraine by neighbouring Russia felt across a number of markets today.

Russian aggression on its border with Ukraine has triggered one of the greatest security crises in Europe since the Cold War.

In 2014, Russia had seized Crimea, an important port region in Ukraine. Conflicts between the two militaries continue till this day but the recent Russian build-up of 1 lakh troops along the border has escalated tensions to unprecedented levels.

Rate hike worries, US Fed speech: Indian markets were dragged down by inflation worries. The US Fed speech this week will be eyed.

Tumbling tech stocks: New-age firms that have listed on the stock market in the last few months at high valuations have taken a beating, dampening investor sentiment.

Retail and high net-worth investors bet big on these stocks but the possibility of the Fed going for multiple rate hikes this year has soured the sentiment.

Globally, too, the tech sector is under pressure, especially in the US.

In India, shares of One97 Communications, the parent of Paytm, CarTrade, PB Fintech, and Fino Payments Bank have slipped between 10 and 50% from their listing price.

Zomato and Nykaa parent FSN E-commerce have sunk 21% from their highs after listing on the bourses in 2021.

Covid cases: Rising Covid cases in India, which have remained above 3 lakh cases for some days now, are also causing concern.

Many states have announced or extended restrictions, which may hamper economic activity in the near term.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, India's #1 trader Vijay Bhambwani explains how you can find out if your stocks are going to fall or not, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

In news from the finance sector, HDFC was among the top buzzing stocks today.

India's largest mortgage lender HDFC's wholly-owned subsidiary HDFC Capital is planning to invest around US$2 bn in affordable housing through its third fund focused on this segment.

The fund, HDFC Capital Affordable Real Estate Fund - 3 (H-CARE-3), is one of the largest funds raised to invest in the residential real estate sector anywhere in the world.

The fund has achieved its first close with investors already committing over US$1.2 bn.

The primary investor of the fund is a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

The total corpus of the H-CARE-3 will be around US$2 bn including the potential reinvestments by the fund.

Deepak Parekh, Chairman, HDFC said,

• In India, housing will play an even more important role as a catalyst for growth with increased demand for affordable and mid-income housing. Combined with India's growth prospects, I have never been as optimistic about the housing sector as I am today.

According to him, while the demand for affordable and mid-income housing continues to be robust, the lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid income housing in India.

HDFC Capital's funds focus on providing developers access to financing on flexible terms and have supported the development of over 78 residential projects and 1.8 lakh houses across India over the last six years.

HDFC share price ended the day down by 2% on the BSE.

Moving on to news from the FMCG sector...

IPO Bound Adani Wilmar is Looking to Acquire Southern Players in Edible Oil, FMCG Industry

Fast moving consumer goods (FMCG) company Adani Wilmar, known for edible oil 'Fortune', is looking to acquire small regional companies with a corpus of Rs 4.5 bn.

The company is one of the leading players in the edible oil segment and is looking to gain more market share further.

The company said in the red herring prospectus.

• We intend to grow our geographical presence. For example, we may pursue acquisitions in the edible oil and food industry to strengthen our presence in the southern regions where regional companies are strong. We intend to consolidate market share through acquisitions of regional players.

Not only is the company interested in buying strong edible oil brands, but also firms who are into ready-to-cook, ready to eat or organic food segments, which is gaining a lot of traction.

The company has set aside Rs 4.5 bn for any future acquisitions from the Rs 36 bn IPO proceeds.

Adani Wilmar has a market share of 18.3% in the edible oil business.

Speaking of the FMCG sector, have a look at the chart below which shows the performance of BSE Sensex and BSE FMCG index since 2009:

While the Sensex has offered 393% returns since 2009, the BSE FMCG index has gone up a staggering 532% returns over the same period.

Richa Agarwal, Senior Research Analyst at Equitymaster, and Editor of the smallcap service, Hidden Treasure, believes this outperformance could continue for many years.

As per Richa, with a rising population and standards of living, Indian's consumption demand for FMCG products will skyrocket over the coming years.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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