5 Reasons Why Sensex Fell 638 Points Today

Mon, 3 Oct Closing

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After opening the day on a negative note, Indian share markets continued their downtrend and extended losses as the session progressed.

Indices ended near the day's low as investors continued to remain pessimistic as central banks keep tightening their monetary policy stoking fears of a global recession.

At the closing bell, the BSE Sensex stood lower by 638 points (down 1.1%).

Meanwhile, the NSE Nifty closed down by 207 points (down 1.2%).

ONGC, Dr Reddy's Laboratories, and Cipla were among the top gainers today.

Adani Enterprises, Eicher Motors, and Adani Ports, on the other hand, were among the top losers today.

The SGX Nifty was trading at 16,870, lower by 218 points, at the time of writing.

The broader markets ended on a negative note. The BSE Mid Cap index ended lower by 1.2%, while the BSE Small Cap index ended down by 0.5%.

Barring telecom sector, all sectoral indices ended in red with stocks in the power sector, auto sector, banking sector, and FMCG sector witnessing most of the selling pressure.

Even the best bank stocks in India and best FMCG stocks in India were not spared as investors gave in to panic selling.

Shares of Gujarat Fluorochemicals, Cipla, and Cochin Shipyard hit their 52-week high today.

Outside the home ground, Asian share markets ended on a mixed note.

At the close in Tokyo, the Nikkei ended up by 1.1%, while the Hang Seng was trading lower by 0.8%. The Shanghai Composite stood down by 0.5%.

US stock futures are trading on a positive note with Dow futures trading up by 0.4%.

The rupee is trading at 81.80 against the US$.

Gold prices are currently trading higher by 0.4% at Rs 50,194 per 10 grams.

Meanwhile, silver prices for the latest contract on MCX are trading up by 1.6% at Rs 56,858 per kg.

Here are five reasons why Indian share markets fell today.

#1 Rising Crude Oil Prices

Crude oil prices rose after the OPEC+ meeting dented investor's confidence. The benchmark brent crude rose by 4% and was trading near US$87 today.

#2 Credit Suisse Crisis

The market was abuzz with rumors around Swiss banking giant Credit Suisse's proposed restructuring plan to be announced on 27 October 2022.

Credit Suisse has seen a sharp rise in spreads on the bank's credit default swaps (CDS), which offer protection against a company defaulting on its debt. The bank's management has been trying to reassure large clients and investors about its liquidity and capital.

#3 Weak Global Cues

Weakness in the global markets pushed the Indian benchmark indices lower. While the Dow Jones fell 1.7% and Nasdaq also shed 1.5%, other Asian markets such as Hang Seng and Shanghai Composite were under pressure.

#4 Depreciating Rupee

The rupee has been falling for quite some time now. Today, continuing the trend, rupee depreciated to 81.9 from 81.3 against the dollar hitting a new low, tracking strength of the dollar and a negative trend in domestic equities.

Rupee's depreciation often leads to discontinuation of FPI buying in India.

If you're wondering how to profit from a falling rupee, check out our editorial on how a weaker rupee benefits you.

#5 The 'FII' Factor

Foreign institutional investors or FIIs have been net sellers in the Indian equity market ever since US Fed's 75 bps rate hike on 21 September 2022. On Friday, FIIs offloaded equities worth over Rs 1.5 bn. Last month, FIIs were net sellers to the tune of Rs 76.2 bn.

Speaking of stock markets, Rahul Goel talks to Devina Mehra about importance of first principles and turning down Ratan Tata's suggestion, in the latest episode of Investor Hour Podcast.

In news from the energy sector, ONGC was among the top buzzing stocks today.

The share price of ONGC jumped 5% as crude oil prices rebounded.

The share price of state-owned oil exploration company Oil and Natural Gas Corporation (ONGC) rose 5% after crude oil prices climbed and the government slashed windfall tax on production and diesel exports.

In the international markets today, oil prices jumped more than 3%, as OPEC+ which is a group of oil producing nations, weighed output cuts by more than 1 m barrels a day. It is the biggest reduction since the pandemic.

Also, India on Sunday slashed the windfall tax on domestically produced crude oil. It reduced the tax to Rs 8,000 per ton from Rs 10,500 in the face of the prevailing downslide in global oil prices.

Further, it also scrapped the export tax on jet fuel and halved export duties on diesel to Rs 5 a liter.

The momentum in the stock was also seen because of natural gas prices. The prices of natural gas were hiked by a steep 40 percent to record levels, in step with global firming up of energy rates.

Due to falling crude oil prices and higher taxes, shares of ONGC are trading down by 11% so far in 2022.

Moving on to news from the retailing sector,  Nykaa share price was in focus today.

Shares of Nykaa zoomed 11% after the company announces bonus issue.

Today, the board of Nykaa approved bonus shares issue in the ratio of 5:1. It means 5 fully paid-up paid-up equity share of Re 1 each for every 1 fully paid-up equity share.

Commenting on it, Nykaa in exchange filing said,

The board approved bonus issue of equity shares in the proportion 5 fully paid-up equity share of Re 1 each for every 1 fully paid-up equity shares of Re 1 each held by the shareholders of the company as on the record date, subject to shareholders' approval by way of postal ballot.

The actual number of bonus equity shares to be issued and post bonus issue share capital will be determined based on the paid-up share capital as on the record date.

The company has fixed 3 November 2022 as the record date for the purpose of determining members eligible for bonus equity shares.

The estimated date by which such bonus shares would be credited/dispatched would be within two months from the date of board approval i.e., on or before 2 December 2022.

Apart from this the board has also approved the re-classification of the authorized share capital from Rs 3.3 bn comprising of 2.8 bn equity shares and 500 m preference shares to Rs 3.3 bn comprising of 325 crore equity shares.

Nykaa is engaged in the business of manufacturing, selling & distribution of beauty, wellness, fitness, personal care, health care, skin care, hair care products on the online platforms or websites.

Due to the sharp corrections in the shares of new-age tech companies the shares of Nykaa are trading down by 37% in 2022.

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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