Sensex falls nearly 1,000 points: 3 key factors for the market crash today

Share market today: The S&P BSE Sensex fell by over 900 points to hit an intra-day low of 80,941.61, while theNSE Nifty50 dropped 247.75 points to reach its lowest point of the day at 24,420.5.

In Short

• Sensex and Nifty fall 1% amid US Fed meeting concerns
• India's trade deficit puts pressure on rupee, affects importers
• Heavyweight stocks like Reliance and HDFC drag indices lower

Stock markets tanked in early trade on Tuesday as the benchmark indices Sensex and Nifty dropped around 1% for the second straight session. The decline came amid investor caution ahead of the US Federal Reserve's meeting scheduled for December 18.

The S&P BSE Sensex fell by 941 points to hit an intra-day low of 80,806.64, while the NSE Nifty50 dropped 274 points to reach its lowest point of the day at 24,394.20.

Despite the decline in the main indices, midcap and smallcap stocks performed slightly better, with both Nifty Midcap and Nifty Smallcap falling only 0.06%.

KEY REASONS FOR MARKET CRASH

US FEDERAL RESERVE MEETING - Global markets are closely watching the outcome of the US Federal Reserve's meeting on December 18. While markets have already factored in a 25 basis points rate cut, investors are keen to hear the Fed chief’s comments on the future path of interest rates. Any unexpected move or statement could negatively impact global markets.

INDIA’S TRADE DEFICIT - India’s trade deficit for November surged to $37.8 billion, putting pressure on the Indian rupee. The rupee is likely to move towards Rs 85 per dollar, which benefits exporters like IT and pharma companies but increases costs for importers. This has affected the stock prices of import-dependent sectors.

WEAK PERFORMANCE OF HEAVYWEIGHT STOCKS - Large companies, also known as index heavyweights, such as Reliance Industries, HDFC Bank, and Infosys, dragged the indices lower. Investors sold shares of these major companies, leading to a broad decline in the market.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained the reasons behind the decline. He said, “Global markets are waiting for the US Federal Reserve’s comments. If the Fed takes a less supportive stance, it could hurt market sentiment. However, this is unlikely."

"India’s widening trade deficit is also a major concern. A weaker rupee will help exporters like IT and pharma firms, but for importers, it increases costs. This has started to reflect in stock prices," he added.

he Sensex witnessed a broad sell-off, with 29 out of its 30 stocks trading in the red. Adani Ports was the only gainer on the index. Other major stocks such as HDFC Bank, Reliance Industries, ICICI Bank, Bharti Airtel, and Larsen & Toubro were the top losers of the day. On the NSE Nifty50, only four stocks – Adani Ports, Cipla, Adani Enterprises, and Tata Motors – managed to stay in the green, while the other 46 stocks declined. The biggest losers on the Nifty50 included Shriram Finance, Bajaj FinServ, Grasim Industries, Bharti Airtel, and PowerGrid.

Sectoral indices reflected the overall market weakness. Nifty Bank, Nifty Financial Services, and Nifty Oil and Gas each fell over 1%. Sectors such as Nifty Auto, Nifty FMCG, Nifty IT, and Nifty Metal also ended the day with losses of more than 0.5%. However, Nifty Media and Nifty Realty bucked the trend, managing to gain nearly 1% each.

In the FMCG sector, the market saw mixed trends. Some stocks like Umang Dairies, Nakoda Group of Industries, and LT Foods managed to gain between 1% and 5%. On the other hand, major FMCG stocks including Emami, Patanjali Foods, Britannia Industries, and Colgate-Palmolive saw declines of more than 1%. This mixed trend reflected selective buying in smaller stocks while larger companies faced selling pressure.