The S&P BSE Sensex on Thursday tumbled over 500 points intraday, while the broader Nifty50 also broke below its key support level of 8,600 amid concerns the US Federal Reserve may consider a rate hike in December. Sentiment turned bearish also on the back of decline in China's exports data.
"China has been a concern for a very long time and today's data indicates that exports are not up to the mark. So markets are seeing a correction. But going ahead, focus remains on quarterly results," told AK Prabhakar, head of research at IDBI Capital to Reuters.
The 30-share index ended the day at 27,643, down 439.23 points, while the broad-based 50-share index quoted 8,573, down 135.45 points at close.
We have compiled five factors that dragged the market lower in today's trade:
- Concerns over Fed rate hike: The minutes of the US Federal Reserve's September policy meeting released overnight indicated that rate hike in US in the month of December could well be on cards. Several voting Federal Reserve policymakers judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen. Fed Chief Janet Yellen is scheduled to deliver a speech on Friday in Boston, which may offer insight into the Fed's latest thinking.
- Slowdown in China: China's September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world's second-biggest economy. Early on Thursday, the mood soured after data showed Chinese imports in dollar terms were back in contractionary territory in September while exports dropped by a sharper-than-expected 10 per cent. The weak trade data fuelled a broader risk-off move. Some analysts said the soft data also raised concerns that China may pursue a weaker currency policy in the coming months, stoking deflationary pressures for the rest of the region at a time when corporate earnings' growth has slowed.
- Index heavyweights trade lower: The benchmark indices fell, dragged lower by heavyweights such as Reliance Industries as well as financial and technology stocks, signalling low risk appetite among investors ahead of some key company results. Stock of TCS fell over 2 per cent as the company geared up to announce its September quarter numbers later in the day.
- IIP remains in negative zone: Market reacted to industrial output data, which remained in the negative for the second month in a row, contracting by 0.7 per cent in August due to slump in manufacturing, mining and capital goods segments.
- Sentiment cautious ahead of inflation data: Investors preferred to remain on sidelines ahead of monthly inflation data based on consumer price index (CPI) for September due later in the day and wholesale price index (WPI) due on Friday.
(With inputs from Reuters)