Bloodbath At Dalal Street: Sensex Tanks 1939 Points, Nifty Slips 568 Mirroring Global Markets

Sensex plunged by as much as 2,149 points or 4.2%, and the Nifty 50 index plummeted by 4.2% to fall below its significant psychological level of 14,500, on Friday ahead of December-quarter gross domestic product data.

The Indian equity benchmarks plummeted on Friday and reported their worst single-day results since March 30, 2020. Sensex and Nifty reflected the fall in other global markets as a rout in global bond markets sent yields flying and spooked investors in the face of concerns that severe losses might trigger distressed selling in other assets.

The Sensex plunged by as much as 2,149 points or 4.2%, and the Nifty 50 index plummeted by 4.2% to fall below its significant psychological level of 14,500, on Friday ahead of December-quarter gross domestic product data.

The Sensex was at 49,099.99 at the close, while the Nifty ended the day at 14,529.15 points.

READ: India's GDP Turns Positive In Dec After Two Consecutive Declines, Grows By 0.4% In Oct-Dec Quarter

Equity benchmark indices broke a three-day winning streak and on Friday closed deep in red with banks and financial stocks leading the market rout amid global selloff and fears of rising inflation.

HDFC twins, ICICI Bank, Kotak Bank, and Axis Bank, along with Reliance Industries, contributed to the Sensex plunge.

After the COVID-19 pandemic outbreak, US Treasury yields have vaulted to their highest levels of about 1.5% on hopes of rapid economic growth and related inflation. Back home, up to 6.23% of the 10-year government bond was signed on Friday, indicating similar patterns.

Global stocks dropped on Friday, with the Emerging Markets Equity Index of MSCI reporting its highest daily fall in almost 10 months and was 2.7% lower. The European shares also opened in red, with the STOXX 600 down 0.7%. The world equity index of MSCI, which tracks 50 countries' shares, was 0.9% lower and was heading for its worst week in a month.

Despite the selloff in the broader market, RailTel Corporation of India made a decent market debut on Friday, as the scrip got listed at Rs 109 on NSE, a 15.96% premium over its issue price of Rs 94.

The investors lost over Rs 5 lakh crore as BSE market capitalization declined to Rs 200.81 lakh crore as compared to Thursday's closing market capitalization of Rs 206.18 lakh crore.

"The domestic markets gave in to a riot of selloff which resulted in the frontline indexes falling by more than 3.75 %, a very rare thing in an otherwise booming market recovering fast from the pangs of the pandemic- induced economic sluggishness. The rising inflationary expectations in the US and the consequent rise in bond yields have been intense discussions of late. US inflation is expected to rise in the coming months, and therefore, the US yields too. The 10 Year US treasury benchmark has already moved up swiftly to 1.50 %, a steep rise from its lowest point of close to 0.50%," said Dr Joseph Thomas, Head of Research, Emkay Wealth Management. 

The Fed Chair had indicated that economic recovery has a long way to go and the risks of runaway inflation are relatively low. Rising inflationary expectations and rising yields have the potential to adversely affect the equity sentiment and the equity markets.