Monday Mayhem! Sensex Plunges 1,000 pts, Nifty Falls Below 17,000; Why is Market Falling Today?

Why are markets falling today? Bears tightened their grip on equity markets real tight as Sensex fell over 900 points intraday while Nifty was hovering around the 17,000 zone on Monday, September 30. After today’s market crash, investors became poorer by around Rs 7 lakh crore as the market capitalisation of all BSE-listed companies dropped to Rs 269.86 lakh crore.

Key Factors

Global Cues

The Dow Industrials was poised to confirm a bear market as a deepening downturn in business activity across the eurozone, and US business activity contracting for a third straight month in September, left Wall Street wallowing in a sea of red. The Dow Jones Industrial Average fell 2.35 percent on Friday, making it the first major US stock index to fall below its June trough on an intraday basis. The S&P 500 lost 2.50 percent and the Nasdaq Composite dropped 2.55 percent on Friday.

Among the Asian names, Nikkei, Taiwan and Kospi are down over two percent each while Shanghai and Hang Seng are trading flat today. SGX Nifty is down 260.50 points or 1.5 percent at 17,071.50 today.

Falling Rupee

Amid a surge in US bond yields and the US dollar index, the rupee on Monday opened 0.68 per cent lower to hit a fresh record low of 81.55 against the greenback.

The local unit had reached a record low of 81.2250 on Friday, prompting the Reserve Bank of India (RBI) to sell dollars, according to traders. The RBI’s intervention had aided the rupee to turn briefly higher on Friday.

“The rupee will be under pressure as the dollar index may significantly rise as a result of the US Fed’s commitment to raise rates in a more hawkish manner in the upcoming months, which may lead the rupee to fall further to 82 to 83.5 levels,” Mohit Nigam, Head – PMS, Hem Securities, said.

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