Market mayhem: ​IT, banks pull Sensex down by over 1,100 points

MUMBAI: IT and banking stocks dragged benchmark equity index Sensex lower by more than 1,100 points on Thursday, amid a selloff in global equities after U.S. Federal Reserve officials warned the US economy was worse than the market was pricing in.

The indices declined for the sixth straight session, and logged their longest losing streak in seven months. Expiry of September derivatives contracts amid a bearish sentiment, added to investor woes. At this juncture, respite was not in sight.

The market selloff eroded Rs 3.9 lakh crore of investor wealth, as BSE’s flagship Sensex tumbled 2.96 per cent of 1,114.82 points to 36,553.60 while peer Nifty tanked 2.93 per cent or 326.30 points to 10,805.55. It was the lowest level since mid-July for both the indices.

“Scotland and UK have said they are contemplating a lockdown. Fears that more economies may close down is creating more nervousness in the market,” said Abhimanyu Sofat, Head of Research, IIFL Securities, adding that the market was on the lookout for reasons to correct, having raced ahead of its valuations.

Dealers also said the vibrant IPO market had diverted some attention from the secondary market. Three IPOs -- Chemcon Speciality Chemicals, Computer Age Management Services (CAMS) and Angel Broking -- hit the market this week, and have received robust response.

“In general, the normal peaking at least in the short term happens when IPOs get oversubscribed 100 times and they open 100 per cent higher. So if you see the same thing happened in the US with Snowflake opening more than 100 per cent higher after raising the price by nearly 50 per cent,” said Samir Arora, founder of Helios Capital. “Similar things are happening in India. But I would say this is a global thing,” he told ET Now.

Hindustan Unilever was the only Sensex stock to close in the green. IT majors Infosys and Tata Consultancy Services (TCS) contributed the most to the benchmark’s decline as they dropped 4.34 per cent and 5.50 per cent, respectively, after scaling record highs earlier this week.

Oil-to-telecom conglomerate Reliance Industries shed 2.17 per cent.

Private lenders HDFC Bank and ICICI Bank declined 1.68 per cent and 4.52 per cent, respectively.

The rapid spread of new coronavirus infections also weighed heavily on the market. India’s total count of coronavirus cases has increased to 5,732,518 as of Thursday morning. The country accounted for 34 per cent of the 2.1 million cases added globally over the last seven days. This is the highest share by far among all countries.

Bears were in charge of the stock market as losers were more than 3 times the gainers on BSE, and as many as 384 stocks hit lower circuit.

All sectoral indices were in the red. BSE IT index, which has been an outperformer in recent times, was the worst hit as it tumbled 4.45 per cent, dragged lower by a sharp sell-off in sector leaders, which had been resilient for a while.

Auto stocks pulled brakes as well, with the sector index declining 3.56 per cent. Ashok Leyland and Tata Motors tumbled 8.56 per cent and 6.51 per cent, respectively.

The broader market was hammered as well, with BSE 500 index declining 2.71 per cent. BSE mid and small cap indices dropped 2.14 per cent and 2.28 per cent, respectively.

NSE’s India VIX or volatility index spiked up 12.32 per cent to 23.5775, indicating that the market may see wild swings in days to come.