Why really stocks crashed, and how D-Street interprets this fall
The BSE Sensex on Friday closed the day at 34,376.99, down 792.17 points, or 2.25 percent. In the 30-share index, only four stocks settled higher.
WHY DID STOCKS CRASH?>> RBI’s status quo on policy rate surprised the market, at a time when inflation was an under-shooting target and recent fuel tax cut may give reduce price pressure.
>> The rupee weakened further, yet RBI looked not too worried about it.
>> Market sees a risk to the fiscal deficit target
>> Rise in US bond yield may trigger fresh outflows from emerging markets, including India.
>> Global markets were weak. European.
>> The rupee weakened further, yet RBI looked not too worried about it.
>> Market sees a risk to the fiscal deficit target
>> Rise in US bond yield may trigger fresh outflows from emerging markets, including India.
>> Global markets were weak. European.
HOW BAD WAS THE MARKET CRASH?>> Rs 3.79 lakh crore of equity investor wealth wiped out in a day.
>> BSE MidCap and SmallCap indices fell 2.70 percent and 2.02 percent, respectively.
>> Sixteen out of 19 sectoral indices on BSE posted losses
>> Oil and gas index fell most at 12.68 percent, energy index 8.52 percent, basic materials, utilities, and metal fell over 3 percent
>> BSE MidCap and SmallCap indices fell 2.70 percent and 2.02 percent, respectively.
>> Sixteen out of 19 sectoral indices on BSE posted losses
>> Oil and gas index fell most at 12.68 percent, energy index 8.52 percent, basic materials, utilities, and metal fell over 3 percent
WHAT DID EXPERTS SAY?VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
“The hold on policy rates has come against the market expectations of a 25 bp rate hike. But the change in stance from neutral to ‘calibrated tightening’ is indicative of the likely tightening to come depending on evolving data.”
“The hold on policy rates has come against the market expectations of a 25 bp rate hike. But the change in stance from neutral to ‘calibrated tightening’ is indicative of the likely tightening to come depending on evolving data.”
Jayant Manglik, President, Religare Broking"The way things have panned out on both domestic and global front, we do not see any chance of overnight reversal. However, the possibility of technical bounce can't be ruled out, citing oversold positions. In short, the sentiment is bearish and traders should continue with "Sell on rising" approach while maintaining caution in stock selection."
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