Stock Market Crash: Sensex Down 850 Points, Nifty At 17,600 — Key Factors Leading To Monday Market Fall

Week global cues and disappointment in domestic Q4 earnings led to a market crash after nine days of incessant rally. Here are the key factors

Bears griped Dalal Street on Monday as the market opened after a long weekend. Week global cues and disappointment in domestic Q4 earnings led to a market crash after nine days of incessant rally. At one point in early morning trading, Sensex crashes over 860 points, while Nifty traded at 17,604.05. 

At 11.00 am, key indices were slightly off the day's lows. the Sensex was down 670.05 points or 1.11 per cent at 59,760.95, and the Nifty was down 167.50 points or 0.94 per cent at 17,660.50. About 1,414 shares advanced, 1,733 shares declined, and 130 shares were unchanged.

The Nifty IT index was the worst performer, down 6 per cent. Infosys dragged the most, down 11 per cent, followed by Tech Mahindra (5.32 per cent), HCL Tech (3.22 per cent), and Wipro (2.73 per cent). 

Key Factors That Led To Monday Market Crash  

IT Disappointment: The bears on Dalal Street have been let loose by Infosys' lower-than-expected revenue figures. Peers and the Nifty IT index, which dropped almost 6.5 per cent, were both affected. Several brokerages have lowered their target prices and downgraded Infosys. Nomura lowered its target price for the stock by 22 per cent to Rs 1,290 and claimed that both transaction closures and guidance point to a bleak future, according to the Economic Times. Infosys hit a 52-week low. 

Global Cues: As the US earnings season is underway, Asian stocks traded cautiously on Monday morning. Meanwhile, investors await Chinese data that will provide insight into how the world's second-largest economy is recovering. The expectation for US interest rates has also changed. According to Reuters,  CME futures indicate an 83 per cent chance that the Federal Reserve would raise rates by a quarter point to 5.0–5.25 per dent in May. Wall Street ended lower last week. 

HDFC Twins: Following the HDFC bank's Q4 profit and net interest income (NII) growth coming in lower than anticipated, HDFC Twins, HDFC Bank, and HDFC  declined over 2 per cent. Axis Securities, in its post-earnings note, said, "HDFCB’s intention to add about 1500 branches per year is not new but its sudden fructification in 4Q is a stark reminder. Regardless of the generic narrative about the advent of digital strategy, there is no substitute for branch footprint when it comes to delivering deposit growth from an elevated base. High sequential operational expenditure (opex) growth was driven not only by branch openings but also by personnel addition. The bank would like to run cost to income ratio at 42 per cent, which may fluctuate on a quarterly basis."

Profit: The market took an opportunity to book profits after rising for nine straight sessions. 

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "FPI buying and short covering have been driving the current rally. Global market construct has also been positive. This positive market construct is likely to change to a slightly negative construct in the near term,  driven by the correction in IT stocks. The worse-than-expected Q4 results from Infosys with only 4-7 per cent revenue growth for FY24 will drag down IT stocks impacting the Nifty. Sectoral rotation from IT to performing sectors like capital goods, pharma and financials will gather momentum." 

Technical factors: According to the ET report, Chart readers note recent market rise was very steep without any breather and momentum indicators had turned overbought.