4 Reasons Why Sensex Plunged 1,457 Points Today

Mon, 13 Jun Closing

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Indian share markets ended deep in the red today as global markets plunged over fears of aggressive policy tightening by the U.S. Federal Reserve later this week.

The Indian rupee touched a lifetime low of 78.28 to the dollar while the benchmark 10-year bond yield hit 7.60%, its highest since 28 February 2019.

Amidst a global sell-off, benchmark indices slumped over 2.5%. The investors were also cautious as domestic inflation data is scheduled to be released later today.

At the closing bell, the BSE Sensex plunged 1,457 points (down 2.7%).

Meanwhile, the NSE Nifty plummeted by 427 points (down 2.6%).

Nestle was among the top gainers today. Bajaj Finance, Tech Mahindra, and TCS on the other hand, were among the top losers today.

The SGX Nifty was trading at 15,784, down by 424 points, at the time of writing.

The broader markets ended deep in the red. The BSE MidCap index and the BSE SmallCap index ended lower by 2.7% and 3.2%, respectively.

All sectoral indices ended on a weak note with stocks in the banking sector, IT sector, and metal sector witnessing most of the selling.

Shares of Mahindra Lifespace hit their 52-week highs today.

Shares of insurance behemoth LIC are under pressure as the 30-day lock-in period for anchor investors ends today. The stock fell 5.6% on the BSE today.

Note that LIC share price is continuously falling, 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.

Note that the stock market is falling as there are inflation worries and geopolitical tensions still remain overhang.

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.

The rupee is trading at 78.05 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.8% at Rs 51,280 per 10 grams.

Here are four factors behind today's stock market meltdown which has eroded over Rs 7 tn of investor wealth:

Red-hot inflation data: US inflation data for May came in at 8.6%, highest since December 1981, weakening the narrative of 'peaking inflation' and opening up doors for aggressive Fed rate hikes ahead.

The print has led to speculations the Fed may contemplate a 75 basis point lift in near future, even as it is likely to stick with a 50 basis point rate hike this week.

On the other hand, the domestic CPI inflation print for May is scheduled to be released today further dampening investor sentiment.

Rupee at all-time low: The rupee tumbled 36 paise to hit an all-time low of 78.29 against the dollar today, weighed by strong demand for the greenback amid risk-averse sentiment.

A weak rupee makes domestic stock markets unattractive to foreign investors while encouraging FII outflows.

The dollar index spiked above the 104 levels today.

Global-sell off: Following Friday's rout, S&P June futures fell another 1.2% today morning. On Friday, the S&P had fallen 2.9% while the Nasdaq Composite had tumbled 3.5%.

As for Asian markets, the Nikkei plunged 3% while the Hang Seng declined 3.4%. The Shanghai Composite was down 0.9%.

European stock markets are trading lower with major indices down over 1.5% with weak UK growth data raising fears of an economic slowdown in the region.

Weakness in global markets weighs on domestic sentiment.

China Covid scare: Adding fuel to the fire, a Covid outbreak has emerged in Beijing's most populous district of Chaoyang, spurring lockdown and growth concerns.

China has a tough zero-Covid policy, which has raised concerns that the country's economic activity may slow down further, hitting demand for metals and oil.

As oil prices are rising, these 4 companies could lose big, should you exit?

Speaking of stock markets, co-head of research at Equitymaster Rahul Shah talks about Tata Motors, in his latest video.

What should one do with the shares of Tata Motors currently? Rahul answers this question in the below video.

Tune in to find out more:

In news from the banking space, shares of RBL bank took a steep dive after the appointment of the bank's new managing director and chief executive officer.

The lender's last CEO, Vishwavir Ahuja, had stepped down from the position due to the central bank's intervention.

RBL Bank had come under the central bank's scrutiny in December 2021, after which the regulator appointed Yogesh Dayal as the additional director on the bank's board for a term of two years.

The private sector lender on Saturday announced the appointment of veteran banker R Subramaniakumar as its new MD & CEO.

The appointment has been made for a period of three years.

Market participants have turned cautious after the appointment of a PSU banker to lead a private lender. This has led to stock downgrades as well.

RBL Bank share price fell 22.7% on the BSE today.

Speaking of the banking sector, are you wondering if it is a good time to buy banking stocks as the central bank has announced another hike in interest rates?

Look at the NPA levels which are currently at 5-year lows, but are still a substantial 6% of the overall loan book.

For now, higher lending rates have offered a bigger margin to banks. Lending rates have gone up but deposit rates are yet to catch up.

So, for a few quarters, higher net interest margins will make the banks look healthy.

Apart from the banks, these 4 companies stand to win big as interest rate rises.

Moving on to stock specific news, Rajesh Exports was among the top buzzing stock today.

Elest, a subsidiary of gold retailer Rajesh Exports, would set up the country's first display fab facility in Telangana with investments worth Rs 240 bn.

The Telangana government signed an MoU with Karnataka-based Elest for the proposed fabrication unit which will manufacture next generation displays for smartphones, tablet computers, and laptops.

The display fab would be set up under the India's semiconductor mission programme of the Ministry of Electronics and Information Technology, Government of India.

According to the release, Elest would also be setting up a research and development center for research in the next generation areas of advanced display technology.

Defying the trend, Rajesh Exports share price ended 2.5% higher on BSE today.

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

Speaking of semiconductors, here's a watchlist of semiconductor stocks in India for you to track.

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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