Sensex wipes off 2018 gains with 759 point fall

Forecasts of a volatile ride at the start of the year are turning out to be true as a Wall Street sneeze on Wednesday saw indices world over catching cold.

Sensex opened the session over 1,000 points down below 34000-mark on Thursday, spooked by the overnight 3.15% drop in Dow Jones Industrial Average in the US.

The 30-share benchmark wiped off all the gains it made in 2018 and closed just above 34000, tumbling 760 points on Thursday. The rupee touched the lifetime low of 74.45 against US dollar during the intra-day trade, before closing at 74.13, a gain of nine paise from its previous close of 74.22 as the Brent crude fell 1.78% to $81.61 per barrel.

Sensex dropped to a low of 33725.28 and closed at 34001.15, 759.74 points, or 2.19%, its lowest closing since April 11. The gauge has lost 0.16% year to date. The broader Nifty plunged 225.45 points, or 2.16%, and settled at 10234.45, slipping the 10300-mark. BSE Midcap and Smallcap also lost 2.34% and 1.41%, respectively.

"Market sell-off has now become international, with last-man-standing index Dow Jones also starting its correction. The sell-off has turned out to be broad-based across industries and categories," said Jagannadham Thunuguntla, senior VP and head of research (wealth) at Centrum Broking.

Global indices across the world witnessed losses after the investor sentiment was hit by a heavy sell-off in world markets. S&P 500 index suffered its biggest one-day fall since February as technology stocks tumbled. S&P 500 lost 3.29% and Nasdaq Composite 4.08% on Wednesday. In their worst day in two years, Apple slipped 4.6% and Amazon lost 6.2%.

"Thursday's market sell-off was part of the global sell-off triggered by the sharp cut in the US market. When the market is highly valued, some trigger can bring it down. In the US, the economy is doing very well, so much so that inflation has started creeping up. The US 10-year bond yield, the risk-free asset in the world, is around 3.15%. This is triggering capital outflows from emerging markets like India. Apart from the rising yield in the US and EM currency woes, global trade skirmishes are impacting the sentiment," said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

"In India, though the Nifty has corrected by more than 10% from the peak and the broader market has suffered deep cuts, even now valuations are not cheap," he said.

Sensex and Nifty had touched lifetime highs on August 28 this year. From January 1 till August 28, the 30-share index had gained 4,910.18 points, or 14.52%. From August high till Thursday (October 11), Sensex has lost 4721.78 points, or 12.19%.

Investor wealth eroded by Rs 2.69 lakh crore on Thursday. Total equity market capitalisation of Sensex at the beginning of September stood at over Rs 158 lakh crore, which fell by almost Rs 20 lakh crore, or over 13%, in a span of 28 days. The total market capitalisation stood at over Rs 138 lakh crore as on October 10, according to BSE.

"The market sees this kind of correction every five years. In 2008 also, we saw this kind of volatility. The lowest level for Nifty was at 9950, which the index claimed at the beginning of the year. This mark is very important. I think very soon we will again touch this level. Things are getting worse before getting better," said A K Prabhakar, head of research at IDBI Capital.

Among the Sensex pack, State Bank of India, Tata Steel, Vedanta, Mahindra & Mahindra, Adani Ports were hit most, tanking as much as 5.74%. Except for BSE Oil & Gas (2.88%) and Energy (0.16%), all the 17 sub-sectoral indices ended negatively. BSE Metal was the worst performer, falling 3.77%, followed by Information Technology (-3.21%), Realty (-3.21%), Teck (-2.90%) and Basic Materials (-2.78%).

As per the provisional data, the foreign portfolio investors sold shares of Rs 1,805.07 crore on Thursday on a net basis while the domestic institutional investors bought shares worth Rs 1,888.18 crore.