Sensex Skids Close To 400 Points: 5 Key Factors That Are Dragging The Market

Technology Stocks Were Under Pressure On The Back Of Sharp Appreciation In Rupee. The Nifty IT Index Was Down Over A Percent As Infosys, The Index Heavyweight Lost Over 2 Percent.

Benchmark indices fell sharply on December 21 following consolidation seen in the previous session after the rally in seven consecutive sessions.

The 30-share BSE Sensex plunged 403.32 points, or 1.11 percent, to 36,028.35, in addition to 53 points decline in the previous session. Before this correction, the index had rallied more than 1,500 points, or 4 percent, in seven consecutive trading days.

The 50-share NSE Nifty fell far below 10,900 levels, down 130.30 points, or 1.19 percent, at 10,821.40 at the time of publishing the copy.

The broader markets, too, were under pressure but the fall was less compared to frontliners. The Nifty Midcap slipped 0.7 percent and Smallcap 0.6 percent.

All sectoral indices were in bear trap except PSU Bank (up 0.17 percent). Nifty Auto, IT and Realty were prominent losers, falling over a percent each.

The correction after strong rally seems to be due to profit booking, which is always needed and a part of rally, experts said, adding the consolidation is expected to continue for a while before moving on in either direction due to lack of domestic and global cues.

Also, the trading volume is expected to be lower for coming few sessions as foreign and domestic investors go on a year-end holiday and Christmas festival.

Here are five key factors that pulled the market down:

Global cues

Asian markets were under pressure, tracking weakness on Wall Street overnight. The threat of a US government shutdown and of further hikes in US borrowing costs sent dismayed investors sailing for safer harbours.

"There will be some cautiousness with the central banks statement that the total external commercial borrowings (ECB) will now be rule-based and will be capped at 6.5 percent of the gross domestic product," LKP Securities said.

The ECB limit now works out to be about $160 billion for the current fiscal year, against the actual outstanding of $126.29 billion as on September 30. The central bank already has a rule-based exposure for foreign investors’ exposure in bonds. Foreigners are allowed to invest up to 6 percent of the outstanding debt.

Japan's Nikkei and China's Shanghai Composite were down over a percent at the time of publishing this article. Hong Kong's Hang Seng and South Korea's Kospi were down marginally lower.

On Thursday, Dow Jones Industrial Average plunged 2 percent while S&P 500 and Nasdaq Composite slipped 1.6 percent each.


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