4 Reasons Why Sensex Crashed 1,747 Points Today

Mon, 14 Feb Closing

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

Benchmark indices witnessed its worst one-day sell-off of calendar year 2022 as increasing tensions between Ukraine and Russia crushed global equities.

At the closing bell, the BSE Sensex stood lower by 1,747 points (down 3%).

Meanwhile, the NSE Nifty closed lower by 532 points (down 3.1%).

TCS was among the top gainers today. JSW Steel and HDFC Life Insurance, on the other hand, were among the top losers today.

The SGX Nifty was trading at 16,838, down by 517 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended down by 3.5% and 4.2%, respectively.

On the sectoral front, realty, metal, banking and finance stocks were among the hardest hit.

Shares of ONGC and RHI Magnesita hit their respective 52-week highs today.

US stock futures are trading on a weak note today with the Dow Futures trading down by 311 points.

The rupee is trading at 75.60 against the US$.

Gold prices for the latest contract on MCX are trading up by 1.2% at Rs 49,694 per 10 grams.

Here are 4 Factors Why Indian Stock Markets Crashed Today

Rising geopolitical tensions: The conflict between Russia and Ukraine continues to rattle global markets.

As Russia continues to increase the number of troops along the border with Ukraine, it is escalating the tensions and waning hopes of any early resolution.

As a result, investors are adopting a risk-averse strategy, attempting to avoid risky equity markets and redirecting funds to safer alternatives.

Sharp rise in crude oil prices: The geopolitical crisis has led to a sharp rise in crude oil prices, which is another headwind for Indian markets.

The crude is inching past US$95 a barrel and fear of it crossing the psychological barrier of US$100 in the coming days is increasingly looking real.

Crude at an eight-year high is another major macro concern for India, which meets more than 80% of its demand through imports.

Weak global markets: The global market has been completely swept by negative sentiment.

Asian stock markets ended deep in the red after the US and major European markets ended the week gone by on a negative note.

The Hang Seng and the Shanghai Composite ended down by 1.4% and 1%, respectively. The Nikkei ended down by 2.2% in today's session.

US inflation and interest rate hikes: Indian stock indices along with other global markets pulled back today after fresh data showed inflation in the US was at a 40 year high.

US inflation accelerated to a fresh 40-year high of 7.5% in January, with the annual core rate, excluding food and energy, running at 6%, the fastest since 1982.

Speculation appeared strong that the Fed would suggest an early rate hike and end its bond-buying programme, something markets have become accustomed to.

Hike in the US interest rates and cut down of bond buying by Fed will curtail dollar supply, leading to redemption in global funds. It would force funds to sell equities aggressively to readjust to the new liquidity scenario.

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 discusses a very important trading topic that does not get the attention it deserves, in his latest video for Fast Profits Daily.

Tune in to find out more:

In news from the banking sector, Axis Bank was among the top buzzing stocks today.

Axis Bank is nearing a deal to buy Citigroup Inc.'s India retail banking business in a transaction that could be valued at about US$2.5 bn.

An agreement for the consumer unit may be announced as soon as the next few weeks and is contingent on approval from the Reserve Bank of India (RBI).

The deal would include a cash component of less than US$2 bn, accounting for the consumer business's liabilities.

The Indian lender emerged as the buyer after beating out rivals, with factors such as job security for current Citigroup employees and competition concerns being taken into account, says a report.

Axis Bank will need around six months to merge its consumer business in the country with Citigroup.

For Citigroup Chief Executive Officer Jane Fraser, the planned India retail sale is part of a restructuring to simplify the US lender, do away with its retail banking operations in 13 countries across Asia and Europe, and focus on high-growth businesses such as wealth management. Axis Bank, India's third largest private sector lender, has been trying to boost retail loans to tap pent-up demand after the first two waves of Covid-19.

Axis Bank, based in Mumbai, said in January that quarterly profit more than tripled on robust earnings from lending and its non-core business including fees and trading, as the easing of the coronavirus pandemic helped a revival in consumer demand.

Axis Bank share price ended the day down by 3.8% on the BSE.

Moving on to news from the FMCG sector...

Adani Wilmar's Net Profit Rises 66% YoY in December Quarter

Newly-listed Adani Wilmar said its consolidated net profit for the December quarter surged 66% year on year (YoY) to Rs 2.1 bn. The firm had reported a net profit of Rs 1.3 bn in the same quarter last year.

The revenue from operations for the quarter came in at Rs 143.8 bn, up 40.6% compared to the year-ago quarter.

'We have been able to continue our business performance in line with what we have been able to showcase in the recent past. As we go forward, our focus will be to grow our food business so that it can contribute reasonably well in our overall basket,' said Angshu Mallick, Managing Director and CEO, Adani Wilmar.

The firm said its revenue from the edible oil segment stood at Rs 121.2 bn during the quarter under review, growing 40%. Volume growth stood at 9%. Food and FMCG segment saw revenue at Rs 7 bn, up 46%. Industry essential segment revenue was at Rs 15.6 bn, growing 41%.

The company said it gained edible oil market share by 9 bps in the quarter, while in the what floor market the market share gain was 140 bps.

During the nine-month of the current fiscal, Adani Wilmar's consolidated volume stood at 3.5 million metric tons (MMT), registering a growth of 4%.

In the period, the company also commissioned an additional oleochemical plant with a capacity of 400 tons per day (TPD) at Mundra and with this, the total capacity now doubled to 800 TPD.

With the strategy to grow the food basket, it has also commissioned a 150 TPD Chana Besan plant in Nagpur and 50 TPD Soya Nuggets plant in Haldia.

Adani Wilmar share price ended the day down by 1.6% on the BSE.

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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