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Why Sensex tanked 1,700 points from day's high today

Why Sensex tanked 1,700 points from day's high today

Sensex has crashed 1,705 points from the high point of the day today. The index had surged to 53,142 in morning trade.

Nifty tanked 348 points intraday to 15,344 (52-week low) against the previous close of 15,692. The index fell 519 points from the high point of the day. Nifty tanked 348 points intraday to 15,344 (52-week low) against the previous close of 15,692. The index fell 519 points from the high point of the day.

Sensex crashed over 1,000 points in afternoon trade today after a brief bout of relief rally in the morning session. The 30-stock index hit an intraday low of 51,482, down 1,059 points against the previous close of 52, 541.

Accounting for the intraday low, Sensex has crashed 1,705 points from the high point of the day today. The index had surged to 53,142 in the morning trade.

Similarly, Nifty tanked 348 points intraday to 15,344 (52-week low) against the previous close of 15,692. The index fell 519 points from the high point of the day.

Earlier, Nifty had surged to 15,863. The crash in the benchmark indices comes after a rally in the morning session following a surge in global peers. However, in the afternoon session, global markets turned negative with European indices slipping nearly 2 per cent each.

While FTSE slipped 145 points or 2 per cent, DAX tanked 2.75 per cent or 372 points. CAC 40 too lost 132 points or 2.18 per cent to 5,898.

Experts said the volatility has returned in the global markets and the event of recent rally due to Fed rate hike is over.  

Mohit Ralhan, Managing Partner at TIW Capital Group

"The central banks across the globe are playing catch up with inflation and making efforts to race ahead of the curve. The 75-basis point increase by the Fed and more importantly the upward revision of 1.5 per cent in the expected year-end rate indicates that the inflation is winning the battle as of now. Fed also significantly cut its outlook for 2022 economic growth to 1.7 per cent down from 2.8 per cent in March. The risk of a recession in the USA has increased and the next two quarters will be extremely crucial. Although Fed expects the inflation to move lower in 2023, the effect of the Fed's actions on the broader economy remains uncertain. The markets are expected to remain quite volatile as it tries to find the balance between economic growth and high inflation."

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Yash Gupta, Equity Research Analyst, Angel One

"Nifty50 has corrected more than 17 per cent from its recent highs of 18,604. We have seen a broader market correction in the last 3 months on the back of domestic as well as global issues. In global markets, there are concerns regarding the inflation in USA, Russia-Ukraine war, crude prices and so on. We have seen corrections of more than 32 per cent in NASDAQ 100 and 20 per cent in S&P 500.

Indian markets continue to see selling pressure from the FIIs as rate hikes in the USA market makes emerging markets less attractive for the foreign investors, along with this domestic issue like higher inflation, increase in the crude oil prices, and rate hike by RBI.

Currently, Nifty is trading at a price to earnings of 19.1x which is in the lower range of the last 5 years' average and the dividend yield is also attractive at 1.5 per cent. Along with this, the Nifty midcap 100 is trading at a price to earnings of 20.8x which is in the lower range of the last 5 years.

We believe that the market is in a consolidation zone now due to global as well as domestic issues but all the near negatives have been priced in the market at this point in time, valuations are attractive for the long-term investors."

AR Ramachandran, Co-founder & Trainer, Tips2Trades

"Weaker global cues following the steepest interest rate hike by the Federal Reserve have caused jitters in all global equity markets. Technically, if Nifty closes below 15,660, in the coming days we could witness 15,240 and 14,890 as well."

Santosh Meena, Head of Research, Swastika Investmart

"Nifty witnessed a breakdown of the key support level of 15,700 as FIIs continued with aggressive selling after a sharp interest rate hike by the US Fed whereas it seems there was a lack of support from domestic institutional investors. The market is fearing that inflation is not going to come under control soon whereas a tight monetary policy may cause a recessionary situation. The near-term structure of the market is weak as the Nifty surrendered 15,700 level where 15,000 is an immediate and critical support level then 14,500 is a sacrosanct support. Indian markets are in a better situation compared to most of the global markets and I believe 15,000-14,500 is a good support area where this correction may get arrested. However, recovery won't be sharp and stock and sector-specific outperformance will be there."

Manoj Dalmia, founder and director, Proficient Equities

"Sensex fell in the afternoon session by 800 points. The reason can be accounted to FIIs selling worth Rs 7474.6 Cr and also the decision of the Fed to increase rates by 0.75 bps raising concerns for the future action of rate hikes by other central banks. Further selling might be seen and Sensex might reach 46,500 levels."

Ravi Singhal, Vice Chairman, GCL Securities

"As a result of the Fed rate hike, it may reach 50,000 levels, and from there, you may see value buying."

Ravi Singh, vice President and head of Research, Share India

"The aggressive rate hike by Fed of 75 bps to curb the soaring inflation has induces a fear of potential plunging the economy into recession. The increase in US rates also raises a major possibility that apart from equity market, other markets like debt and bond market may also see some FIIs outflow anytime soon in India. This led to an panic selling in the equity market triggering the stop losses. Investors must wait for entering any fresh positions and watch for the sentiments to turnaround."