Indian equity markets fell heavily in the late afternoon trades on Friday following the weaker Asian cues and TDP exiting Modi-led NDA which triggered a bloodbath on Dalal Street with Sensex crumbling 510 points to close nearly at a three-month low. The 30-share barometer Sensex tanked as much as 565.62 points to a day’s low of 33,119.92 before settling down 509.54 points at 33,176 on Friday. Earlier on 7 March 2018, Sensex bottomed to a three-month low of 32,991.14. All the components of BSE Sensex index barring the stock of Mahindra & Mahindra hovered in the negative region with heavyweight shares of companies such as Reliance Industries, ITC, HDFC, HDFC Bank, Tata Consultancy Services, ICICI Bank, Coal India, Tata Motors, and Kotak Mahindra Bank.
We take a look at 4 reasons why Sensex plunged over 566 points today
TDP’s withdrawal from NDA
In a major blow to the Narendra Modi-led NDA (National Democratic Alliance) given the upcoming general elections 2019, TDP (Telugu Desam Party) had pulled out of the ruling majority NDA over the grant of special status to N. Chandrababu Naidu-led Andhra Pradesh steering the stock market to a mini-crash. TDP, being the second-largest ally to BJP with 16 MPs in the house seemed to have brought a wave of pessimism amid the market participants.
Blue-chips tumble resulting in volatility surge
The S&P BSE Sensex nosedived as much as 566 points intraday with shares of big blue-chip companies such as Reliance Industries, ITC and HDFC, HDFC Bank crumbling massively posting a huge drag to the key equity index. Shares of Tata Motors (down 3.67%), Tata Steel (down 1.78%), ONGC (down 2.26%), HDFC (down 2.15%), Sun Pharma (down 2.63%), NTPC (down 2.65%), Adani Ports (down 2.89%), Reliance Industries (down 1.29%), ITC (down 1.85%), Dr Reddy’s (down 2.07%), Asian Paints (down 3.09%), Kotak Mahindra Bank (down 2.58%), Hero MotoCorp (down 2.67%) and TCS (down 1.52%) were the top losers among the BSE Sensex components. India Vix, the volatility reflector of the Indian equity markets, surged 9.19% to a day’s peak of 15.6225. All the sectors including PSU banks fell into losses in the late trades.
Weaker Asian cues
Asian stock markets were mixed on Friday as investors remained cautious about the US plans to raise tariffs on imports of steel and aluminium with uncertainty over White House politics also casting a shadow, Associated Press reported. All the major regional stock markets except South Korea fell down in today’s session with Japan’s Nikkei 225 diving 0.6% to 21,676.51, Hong Kong’s Hang Seng dipping 0.4% to 31,408.15, China’s Shanghai Composite losing 0.6% to 3,272.02. South Korea’s Kospi traded little changed, up 0.1% at 2,493.97.
US stock market slump
US stock markets ended in negative territory for the fourth continuous session with the S&P 500 ended slightly lower on Thursday after a report that US Special Counsel Robert Mueller had issued a subpoena for documents related to US President Donald Trump’s businesses offset strong jobs and manufacturing data, Reuters reported. The Dow Jones Industrial Average rose 115.54 points or 0.47% to close at 24,873.66, the S&P 500 lost 2.15 points or 0.08% to 2,747.33 and the Nasdaq Composite dropped 15.07 points or 0.2% to 7,481.74.
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