Stock Market Slump: Sensex Tanks 1,100 Points, Nifty Down 1.4%

Amid weak global cues, Indian frontline indices slumped on Tuesday, with the BSE Sensex tanking over 1,100 points and the NSE Nifty 50 slipping by more than 350 points.

As the markets closed, Sensex settled 1.3% lower at 80,684.45, whereas the Nifty ended 1.35% lower at 24,336. Both the indices were dragged down by heavyweights like Infosys Ltd., HDFC Bank Ltd. and Reliance Industries Ltd.

The slide in the broader indices was not as sharp as the benchmarks. The Nifty Midcap 100 settled 0.57% lower and Nifty Smallcap 100 declined by 0.68% lower.

India’s merchandise trade deficit widened to a record high in November, led by a fourfold jump in gold imports, according to the data released by the government on Monday. In absolute terms, the trade gap widened to $37.8 billion in November, compared to $27.1 billion in October.

The zooming trade deficit has dampened investor sentiment to some extent, said analysts.

“It did have a kind of a notable sentimental impact in today’s trading, although primarily the markets have witnessed some kind of profit-booking ahead of the upcoming holiday season,” said Kranthi Bathini, director of equity strategy at WealthMills Securities Pvt.

The sentiment at the stock market was also subdued due to the impending US Federal Reserve meeting this week, a section of analysts said. Traders worldwide are keeping a close watch on the decision to be taken by the US monetary policy authority, as the path it lays down on interest rate cuts could affect the action to be taken by other major central banks.

“The market is in a wait-and-watch mode ahead of the Fed decision,” said Bathini, as he explained that this could have hurt the momentum shown by equity buyers in recent period.

Notably, the Fed is expected to announce a 25 basis points reduction in the benchmark lending rate on Wednesday, in what would be its last rate cut decision of this calendar year.

The Chinese government has decided to increase the budget deficit for next year to 4% from 3%, news agency Reuters reported earlier on Tuesday, citing sources. This indicated a potential rise in the fiscal stimulus measures to be rolled out by China to revive its economy.

The development may have affected the Indian market, as it is feared that foreign institutional investors could exit India and head to China in case of Beijing rolling out a strong stimulus to revive its economy. “The ‘Sell India, Buy China’ factor could adversely impact the Indian market. This could be the primary reason for selling pressure,” Seema Srivastava, senior equity analyst at SMC Global Securities, reportedly said.

Apart from the above reasons, the Indian stock market was also weighed down by the negative global cues, some of the analysts said, as they pointed towards the underperformance in the Asian markets.

Hong Kong’s Hang Seng Index settled 0.48% lower at 19,700.48, whereas Japan’s Nikkei 225 declined 0.24% to 39,364.68.