Sensex plunged 287.15 points or 0.84 per cent to 33,847.23 while slipped 98.45 points or 0.96 per cent to 10,146.80.
Weak global cues further hit market, which was already trying to cope with pessimism emanating from NBFC crisis.
After registering a gap-down opening, Sensex and Nifty remained in the negative territory throughout the day as wobbly rupee, uninspiring earnings and negative global cues shattered investor risk-appetite.
Below are the key factors that weighed on market today:
Global stocks plummeted: Global markets lurched toward their lowest level in one-year, as worries over Saudi Arabia’s diplomatic isolation, Italian budget and trade war dent the sentiment. Following a decline in Wall Street, heavy selloff emerged in Asian markets, which extended toward European markets.
Hang Seng plunged 3 per cent, while Shanghai SE Composite Index, Nikkei and Taiwan TSEC 50 Index suffered losses of over 2 per cent each. Emerging market stocks and currencies took a beating on Tuesday as concerns over Italy’s budget, Brexit talks and Saudi Arabia’s handling of Jamal Khashoggi’s killing kept investors’ appetite for risk in the doldrums, Reuters reported.
Bullish dollar: The US dollar rose to a two-month high against its peers, aggravating the capital outflow from emerging markets. Dollar strengthened as euro fell towards a two-month low before a meeting by the European Commission on Italy’s budget.
Fear of NBFC contagion: Market looked apprehensive over health of NBFCs and its contagion to other sectors such as real estate. Despite measures taken by the government and RBI to infuse liquidity into the system, investors’ worries on liquidity crisis appear far from being assuaged. From the NBFC space, Transcorp International (down 13.11 per cent), Frontline Securities (down 10.43 per cent), GCM Capital Advisors (down 10 per cent), NATECO (down 9.92 per cent), India Cements Capital (down 9.82 per cent), Pioneer Invest Corp (down 9.76 per cent), AIIL (down 9.31 per cent), Wall Street Finance (down 8.44 per cent), Aryaman Capital Markets (down 8.40 per cent) and Vertex Securities (down 7.69 per cent) suffered most.
Rupee’s health: Rupee’s instability is a major concern for the market. The domestic unit swung between gains and losses throughout the day. After falling lower by 27 paise to 73.83, it turned flat only to proceed on the downward trajectory soon.
Oil concerns: Even as crude prices eased slightly on Tuesday after Saudi Arabia said it would play a “responsible role” in energy markets, the concerns over tight supply due to US sanctions on Iran overhangs. The US sanctions on Iran will come into effect on November 4 which is expected to push oil prices higher in global markets.
FII outflows: Unabated foreign fund outflows have kept domestic under pressure. As per provisional data available, FIIs have pulled out nearly Rs 33,000 crore from debt and equities in October so far. Deteriorating macros, rising crude and bond yields in the US are the major factors that triggered the capital outflow.