Sensex plunges over 400 points today, 5 reasons behind the fall

The BSE Sensex and NSE Nifty opened on a weak note on Wednesday and touched their fresh 52-week low following weak global cues, soft rupee and falling crude oil price.

The BSE Sensex and NSE Nifty opened on a weak note on Wednesday and touched their fresh 52-week low following weak global cues, soft rupee and falling crude oil price. (AP)

The BSE Sensex and NSE Nifty opened on a weak note on Wednesday and touched their fresh 52-week lowfollowing weak global cues, soft rupee and falling crude oil price. At 9.39 am, Sensex was trading 401.52 points down at 24,078.32. NSE Nifty was trading 135.50 points down at 7,299.60. Track markets here

Sanjeev Zarbade, vice-president, private client group research, Kotak Securities, said, “Going ahead, we believe the volatility in the markets would continue. China and crude oil would continue to drive markets.We advise investors to look beyond this volatility and take a medium term view. Make volatility your friend by investing on dips.”

Below are the reasons why Sensex fell over 400 points today:

1. The fall in Sensex was attributed to heavy selling pressure in heavyweight Reliance Industries that announced it third quarter results on Tuesday and reported its highest-ever quarterly net profit of Rs 7,290 crore for the three months ended December on refinery margins spiking to seven-year high. At 9.49 am, RIL shares were trading 3.65 per cent down at Rs 1,005.50.

2. Crude futures slumped again in early Asian trade on Wednesday, with US oil falling to its lowest since September 2003 below $28 a barrel on worries about global oversupply. That came after the International Energy Agency, which advises industrialised countries on energy policy, warned that oil markets could “drown in oversupply” in 2016.

3. China’s volatile stock markets fell more than 1 per cent on Wednesday, though mounting chatter about imminent policy stimulus provided some support against the backdrop of a fresh slide in oil prices, which hit stock markets across the globe.

4. Asian share markets were in full retreat on Wednesday as a relentless slide in oil prices soured an attempted rally on Wall Street and dealt a further blow to global investors’ appetite for riskier assets. US crude wallowed at its lowest since 2003 after the world’s energy watchdog warned the market could “drown in oversupply”. US crude futures shed 53 cents to $27.93, while Brent crude lost 24 cents to $28.52 a barrel. Japan’s Nikkei fell 2.2 percent, leaving it 20 per cent below last year’s peak and so meeting the technical definition of a bear market.

5. Indian rupee tumbled 30 paise to trade over 28-month low at 67.95 against the dollar in early trade, mainly due to strong demand for the American unit from importers and banks amid a lower opening in the domestic equity market.

First Published on January 20, 2016 9:56 am