Stock Market Crash: Sensex Plunges 1,000 Points On Friday. Here Are The Key Reasons

Among the Nifty losers are big names like Adani Ports, Adani Enterprises, ICICI Bank, SBI, and BPCL. As all other sectors were trading in red, only Nifty auto and FMCG managed some gains

After a day's break on the occasion of Republic Day, when the market opened on Friday it was bloodbath everywhere. Sensex sank 1,000 points to 59,156 and the Nifty slipped below the 17,600 mark, down more than 300 points in the afternoon trade. Eventually, the BSE Sensex settled 874 points down to 59,331, while the NSE Nifty50 logged 17,604, down 284 points. 

Among the Nifty losers are big names like Adani Ports, Adani Enterprises, ICICI Bank, SBI, and BPCL. As all other sectors were trading in red, only Nifty auto and FMCG managed some gains. 

On the 30-share Sensex platform, SBI, ICICI Bank, IndusInd Bank, Axis Bank, Kotak Mahindra Bank, and Reliance declined sharply and were trading in the red. On the flip side, only seven stocks were trading in the positive territory – Tata Motors, ITC, M&M, UltraTech, Bajaj Fivserv, and NTPC among them. 

According to a MoneyControl report bears took a strong lead for a second consecutive session resulting in a loss of Rs 11.75 lakh crore of wealth during 2 sessions. The BSE market capitalisation fell from Rs 280.39 lakh crore, to 268.64 lakh crore as of 14:46 hours IST.

Some Key Factors Causing A Free Fall In The Market

• On January 27, despite a bullish trend in global peers, the Indian market succumbed to significant selling pressure, with the benchmark indices dropping by about 2 per cent as investors grew apprehensive ahead of two crucial events next week: the Union Budget 2023 and the US Federal Reserve meeting.


• Many expert markets decline sharply before the Budget and then quickly recover afterward. Market participants have their hopes for the Budget.  


• Foreign brokerage Morgan Stanley expects the fiscal deficit to be 5.9 per cent of the GDP in FY24 against 6.4 per cent for FY23. Upasana Chachra, Chief India Economist, Morgan Stanley said, “There is a need to consolidate the fiscal deficit. The starting point of 6.4 percent is already so elevated that markets will not like it if there is any further slippage.” 


• Another factor in this crash is the Federal Open Market Committee (FOMC) scheduled on the same day of the Budget 2023 on February 1. US Fed officials have warned about aggressive rate hikes to control inflation.


• In a research report, chief US economist at High-Frequency Economics Rubeela Farooqi wrote, “Recent data suggest that the pace of expansion could slow sharply in (the current quarter) as the effects of restrictive monetary policy take hold. From the Fed’s perspective, a desired slowdown in the economy will be welcome news.”


• For the second consecutive day, Adani Ports and Adani Enterprises are still falling. The stock value decreased by 18 per cent and 17 per cent, respectively. 


• Shares of Adani Enterprises plunged amid the ongoing controversy with Hindenburg Research. For now, the US-based Hindenburg Research has said it stands by its report and shall demand company documents in the US courts. The said statement came after Adani Group said it was examining legal action against Hindenburg.


• Vinod Nair, Head of Research at Geojit Financial Services told MoneyContral, “Market sentiments are dampened by persistent FII selling, where funds are being shifted to other emerging markets as a result of attractive valuations.”