Sensex drops over 1,000 pts intra-day: Top factors behind Thursday's crash

Index heavyweights, Reliance Industries and Tata Consultancy Services contributed the most to the sharp cuts as they slipped between 2-3 per cent.

Bears tightened grip on domestic markets on Thursday amid wobbly global sentiments and weak macro cues. Frontline Nifty50 index dropped over 250 points to hit a low of 17,468 levels, whereas the S&P BSE Sensex crashed over 1,000 points to a low of 58,522 levels. 

However, Nifty50 settled 200 points lower at 17,542 and the S&P BSE Sensex at 58,766, down 750 points.
 

Index heavyweights, Reliance Industries (RIL) and Tata Consultancy Services contributed the most to the sharp cuts as they slipped between 2-3 per cent.
 

Broader markets, however, outperformed benchmark indices as Nifty Smallcap 100 and Nifty Midcap 100 gained up to 0.1 per cent each.
 

Sector-wise, Nifty IT, Nifty Pharma, and Nifty Energy faced the worst of the selloff as both indices tumbled over 1 per cent each. Nifty Auto, Nifty Media, Nifty Realty, meanwhile, helped the indices trim losses.

That said, analysts await a turnaround in markets amid healthy foreign inflows.

"Domestic indices moved in line with peers, while prospects of higher rate hikes, elevated inflation and a slowing economy put pressure on stock markets around the world. Although India's Q1 Gross Domestic Product (GDP) was reported below the RBI’s estimate of 16.2 per cent, the strong growth seen in manufacturing activity during Q2 so far indicates a strong recovery in the domestic market. Additionally, ongoing support from FIIs will obscure the weakness, helping domestic indices to stay resilient," Vinod Nair, Head of Research at Geojit Financial Services said.
 

Here are top factors behind the steep fall in markets on Thursday:
 

Rate hike fears: According to ADP National Employment Report, tracked widely by the US authorities, around 11.2 million jobs were vacant on the last day of July, up from 11 million recorded in June. The strong US jobs data supported the argument for the US Federal Reserve to stick to their hawkish stance. Till now, the US Fed has already raised interest rates four times this year. 
 

Weakening global sentiments: As investors brace for higher interest rates and inflation, the US markets closed in negative territory on Wednesday for the fourth consecutive day. Dow Jones slipped over 200 points, to close 0.8 per cent lower, while the S&P 500 and NASDAQ Composite dropped 0.7 per cent and 0.5 per cent, respectively. Moreover, the US equity futures were subdued in Thursday’s trade as well. The dark spell comes after the US Fed Chief Jerome Powell’s reiteration of tough stance to overcome inflation.
 

Following dull mood overseas, Asia-Pacific markets, too, slipped in Thursday’s trade with Nikkei 225, Shanghai SE Composite, Hang Seng index, Kospi, S&P 200 declining up to 2 per cent.
 

Profit-booking in RIL: Index heavyweight RIL slipped 3.2 per cent to Rs 2,555 per share on Thursday after the government revised windfall tax on domestically produced crude oil and export duty on diesel and jet fuel. The government hiked windfall profit tax on diesel exports to Rs 13.5 per litre and jet fuel to Rs 9 per litre. The government also raised levy on domestically produced crude to Rs 13,300 per tonne from Rs 13,000 after Brent Crude clawed above $100 per barrel.
 

GDP data misses estimates: India's GDP jumped 13.5 per cent year-on-year (YoY) in the April-June period. Though it was the fastest annual expansion in a year, it missed estimates made by the Reserve Bank of India (16.2 per cent) and other analysts. Besides, the GDP contracted 9.6 per cent in the June quarter of FY23 compared to the March quarter of FY22. Government spending, on the other hand, eased 1.3 per cent in Q1FY23 from 4.8 per cent Q4FY22.
 

Fall in GST collections: Though India collected goods and services (GST) tax worth Rs 1.43 trillion, up 28 per cent from Rs 1.1 trillion in August 2021; the collections shrunk 3 per cent from Rs 1.48 trillion in July 2022. Out of Rs 1.43 trillion collected in August 2022, Rs 24,710 crore belonged to the Central GST, Rs 30,951 crore to the State GST, and Rs 77,782 to the integrated GST.