Equity benchmark indices–Sensex and Nifty–went into free fall on Wednesday, January 17, slumping nearly 2 per cent each intra-day as risk-off sentiment prevailed and banking majors suffered the worst decline.
The BSE Sensex tumbled 1,487 points to an intra-day low of 71,642. The NSE Nifty benchmark pulled pack by 420 points to 21,612, its day’s low.
“After a significant upmove recently, markets are taking a breather since valuations are above historical multiples. Thus, in the near term, we expect heightened levels of volatility,” said Naveen Kulkarni, CIO at Axis Securities PMS.
Here’s a rundown of what led to the market crash on Wednesday:
There was a dip in the liquidity coverage ratio to 110 per cent from 121 per cent in the last quarter. This could delay margin improvement, said Morgan Stanley as it cut FY25 and FY26 EPS estimates by 3 per cent each.
While NIM appears to have bottomed at 3.4 per cent, the drivers for its expansion appear to be slower than expected, said Kotak Inst Equities.
This was seen as a push back against expectations for as many as six rate cuts this year. US 10 year yield popped above 4 per cent overnight as US stock indices logged losses of up to 0.6 per cent.
Hong Kong’s Hang Seng tanked 3.7 per cent, CSI 300, Kospi too sank over 2 per cent each. Nikkei dipped 0.4 per cent.
Geopolitical tensions: Iran-backed Houthi rebels of Yemen have kept global shipping industry on tenterhooks. While oil markets have remained steady, risk that the Red Sea crisis could spill beyond the Middle East is keeping the sentiment bleak.
First Published: Jan 17 2024 | 2:16 PM IST