4 Reasons Why Sensex Plunged 1,017 Points Today

Fri, 10 Jun Closing

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Indian share markets ended deep in the red today as stock markets across the globe were roiled by worries over the impact of aggressive policy tightening by central banks.

Benchmark indices slumped over 1.5% as expectations of high inflation data from the US, dampened investor sentiment.

At the closing bell, the BSE Sensex plunged 1,017 points (down 1.8%).

Meanwhile, the NSE Nifty plummeted by 276 points (down 1.7%).

Asian Paints, Ultratech Cement, and Dr Reddy's Laboratories were among the top gainers today.

Kotak Mahindra Bank, Bajaj Finance, and HDFC, on the other hand, were among the top losers today.

The SGX Nifty was trading at 16,174, down by 301 points, at the time of writing.

The fall on broader markets was not as severe as benchmarks. The BSE MidCap index and the BSE SmallCap index ended lower by 0.6% and 0.7%, respectively.

All sectoral indices ended deep in red with stocks in the banking sector and IT sector witnessing most of the selling.

Shares of TVS Motors and Maharashtra Seamless hit their 52-week highs today.

Continuing the downtrend, LIC share price fell further and hit a new low of Rs 708 today.

To put things in perspective, the scrip has wiped off almost one-fourth of investor wealth which is equivalent to the market cap of bluechip stocks like Tata Motors and JSW Steel.

Titan share price rose today, after being under pressure for the past few days.

Amid the volatility, many stocks have hit their 52-week lows, despite strong fundamentals.

In this uncertainty, check out these 5 fundamentally strong companies which pay regular dividends and are undervalued.

Asian stock markets posted mixed signals tracking a global sell-off after the European Central Bank painted a dim outlook for the region's economy.

The Nikkei plunged 1.5% while the Hang Seng declined 0.3%. On the other hand, the Shanghai Composite jumped 1.4%.

European shares extended losses to a fourth consecutive session on Friday, after digesting European Central Bank's rate hike commentary and awaiting US inflation data that could spur more speculation about the Federal Reserve's policy decision next week.

European Central Bank hinted that it will hike interest rates by 25 bps in July policy meeting, followed by next in September.

US stock futures are trading on a negative note with the Dow Futures trading down by 75 points.

The rupee is trading at 77.82 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.4% at Rs 50,817 per 10 grams.

Here are four factors behind today's stock market meltdown:

US inflation numbers: The world's largest economy is expected to post inflation numbers nearing a four-decade high. This will induce tighter monetary policy by the Federal Reserve and further dampen the sentiments for equity markets.

Supply disruptions due to the Covid-19 pandemic and the war coupled with a revival in consumer demand for services have pushed prices up at the fastest pace in about 40 years.

Investors are nervous about a potential slowdown in the global economic growth as May consumer-price index report is scheduled to be released later today.

Rupee at all-time low: Domestic currency hit a fresh low of Rs 77.82 per US dollar on Friday. The dollar index extended its gain as it was supported by a hike in US treasury bond yields. However, sharp upsides were capped by weak economic data.

Rise in crude oil prices: Oil prices have been rallying over the last two months owing to hike in prices of refined products due to tight refining supply and surging demand. Despite a marginal drop in prices today, crude prices hovered near three-month high.

FII outflows: The risk-off sentiment following rate hikes by the central bank and the weakening rupee have encouraged global investors to pull out money from the Indian markets.

In the first five months of 2022, the overseas investors have pulled out Rs 1.6 tn from the domestic share markets. The selling pressure has continued in June, with FPI outflow of Rs 24 bn in equity markets as reported by NSE on 9 June.Speaking of stock markets, Co-head of research at Equitymaster Rahul Shah discusses why a falling market is an investor's best friend.

If the entire market has taken a beating, what are the kind of stocks that an investor should buy?

Are bluechips the only available opportunity? Or can stocks from the mid-cap and small-cap space prove to be a good bet?

Rahul answers all these questions and much more. Tune in to the below video to know more:

In news from the infrastructure space, Welspun Enterprises announced that it has executed definitive agreements to exit its portfolio of operating road concessions to Actis Highway Infra.

The company sold the portfolio for an aggregate enterprise value of approximately Rs 60 bn.

The enterprise value excludes construction linked grant payments of approximately Rs 30 bn received/receivable from National Highways Authority of India (NHAI) and Public Works Department of Government of Maharashtra (PWD).

Thus, valuing the highway portfolio being exited at approximately Rs 90 bn.

The entire transaction is expected to be completed by the end of the ongoing financial year, subject to completion of customary and regulatory compliances and approvals from NHAI, PWD, and lenders.

Welspun Enterprises share price ended 7.1% higher on the BSE today following the announcement.

Speaking of engineering and infra stocks, have a look at the chart below to see how the infra index has performed over the years:

The increased capex plans, backed by government's announcements on the production linked incentive (PLI) schemes has pushed the index higher in the past one year.

Global supply chains are shifting away from China and India is a key beneficiary of that trend.

In other news from the engineering space, Tata Group company TRF share price got stuck in 5% upper circuit for second consecutive session today.

Bulls are buoyant on TRF after promoter company Tata Steel announced an investment of Rs 1.7 bn in the company.

Tata Steel acquired 165 m equity shares along with some preference shares. Currently Tata Steel holds 34.1% equity stake in TRF.

Through the buying of preference shares, Tata Steel will assist TRF in meeting its additional working capital requirements, repaying the whole or a part of the existing debts, and other general corporate purposes.

TRF is engaged in designing & manufacturing the bulk material handling systems and equipment for core sector industries such as power, ports, steel, mining, and cement for projects undertaken on a turnkey basis.

To know more about the company, check out TRF's company factsheet and its latest quarterly results.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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