Rs 3 lakh crore investor wealth wiped off: Key factors behind Sensex crash today

New Delhi: Over Rs 3 lakh crore worth of investor wealth was wiped out on Dalal Street on Monday morning as the Sensex fell over 800 points to hit an intraday low of 57365.68. The sell-off comes amid weak global signals after September's strong US employment report raised concerns about a sharp interest rate hike by the US Fed.

The total market capitalization of all companies listed on the BSE dropped by Rs 3.11 crore to Rs 272.5 crore.

Here are the main factors driving the stock market lower today:

Fed fear after jobs data

Concerns about sharp interest rate hikes by the US Federal Reserve have once again plagued investors, as the shockingly low US unemployment rate of 3.5 percent means that the Fed will have to keep raising rates for longer than the markets priced in.

Fed Policy Rate Linked Futures price indicates 92% chance the Fed will raise its policy rate, now by 3%-3.25%, to the 3.75%-4% range when it meets on November 1 and 2. If the concerns are valid, Powell will deliver the fourth straight 75 basis point rate hike next month.

“The paradoxical construct of good economic news turned into bad news for the markets again last Friday in the US,” said Dr. VK Vijayakumar, chief investment strategist at Geojit Financial Services.

FII Selling

Having sold Indian equities worth over Rs 7,600 crore last month, foreign institutional investors or those involved in the fishing industries were net sellers of up to Rs 2,251 crore on Friday amid a depreciating rupee.

Crude Oil Prices

Benchmark Brent crude futures rose more than 11% last week after a Saudi-led production cartel agreed to cut output. Approaching $100 a barrel again, Brent crude traded at $97 on Monday morning.

Rupee fall

The Indian rupee fell 38 paise to hit a record low of 82.62 against the US dollar on Monday. The local currency is down more than 11% so far in calendar year 2022. The US Dollar Index, which measures the US currency against a basket of 6 currencies, traded near the 113 mark.

Bond yields

Yields on 10-year US Treasuries rose 3.90% and 2-year notes 4.3% on anticipation that the Federal Reserve remains determined to tighten monetary policy. "The labor market is still strong and inflation is not coming down fast, which still means the Fed could raise rates as high as 5% and that will break parts of the economy," said Edward Moya, Senior Market Analyst at OANDA.

Global markets

The mood was subdued in Asian markets where Japan and South Korea were closed for the holidays. MSCI's broader index of Asia Pacific stocks outside of Japan fell 1.4%. On Friday, the Dow finished more than 2% lower.

Technical factors

Analysts said that Nifty found resistance around the 17400 level. Now that the biggest support reached or broken lies at and below 17000, the index could quickly slide to the 16747-16775 area.

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