5 Reasons Why Sensex Plunged 984 Points Today

Fri, 30 Apr Closing

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Indian share markets witnessed huge selling during closing hours today and ended their day deep in the red.

Unfavourable global market cues, unabated rise in Covid cases and hiccups in vaccination drove Indian benchmark indices lower today after witnessing four straight sessions of gains this week.

At the closing bell, the BSE Sensex stood lower by 984 points (down 2%).

Meanwhile, the NSE Nifty closed lower by 264 points (down 1.8%).

ONGC and Coal India were among the top gainers today.

HDFC and HDFC bank, on the other hand, were among the top losers today.

The SGX Nifty was trading at 14,642, down by 290 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.7% and 0.1%, respectively.

On the sectoral front, banking stocks and finance stocks were among the hardest hit.

Oil and gas sector, on the other hand, witnessed buying interest.

Shares of SAIL and Tata Metalik hit their respective 52-week highs today.

Titan Company and Ambuja Cement were among the top buzzing stocks today.

Asian stock markets ended on a negative note today.

The Shanghai Composite and the Hang Seng ended the day down by 0.8% and 2%, respectively.

The Nikkei ended down by 0.8% in today's session.

US stock futures are trading on a negative note today with the Dow Jones Futures trading down by 106 points.

The rupee is trading at 74.06 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 46,767 per 10 grams.

Here are Top 5 Factors Why Indian Stock Markets Crashed Today

Spike in Covid-19 Cases: A sharp rise in Covid-19 cases are posing a serious threat to the economic recovery of the world. India has reported 3.9 lakh fresh Covid-19 cases in the last 24 hours - the biggest spike in daily cases witnessed since the pandemic began last year.

The country also reported 3,502 deaths in the last 24 hours.

Rising Bond Yield: The 10-year US Treasury yield rose to 1.7%, highest in more than two weeks, and the last stood at 1.6%.

US Dollar: The U.S. dollar skidded towards a fourth straight weekly decline and its longest weekly streak of losses since last July against a basket of major peers, as the Federal Reserve stuck to its message of ultra-low interest rates for longer.

Week Global Cues: Asian stock markets ended on a negative note today as investors struggled to take the lead from a record performance on Wall Street and following below-forecast Chinese factory data.

Europe's economy shrank 0.6% in the first three months of the year as slow vaccine rollouts and extended lockdowns delayed a hoped-for recovery and underlined how the region is lagging other major economies in rebounding from the coronavirus pandemic.

Profit Booking: Apart from the above, losses were also seen as share market succumbed to profit-booking after a healthy rise witnessed for the stock markets lately.

Most of the profit-booking was seen in the banking sector today with stocks such as HDFC Bank, ICICI Bank and Kotak Bank dragging the benchmark index lower.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of the stock markets, Brijesh Bhatia, Research Analyst at Fast Profits Report, talks about why he thinks it's a good to buy smallcaps and why the upside could be huge, in his latest video for Fast Profits Daily.

Tune in here to find out more:

In news from the tea and coffee industry, Tata Coffee was among the top buzzing stocks today.

Shares of Tata Coffee rallied over 9% in today's session to hit a 52-week high of Rs 139.7 on the BSE after the company posted a strong set of results for the quarter ended March 2021.

On 29 April 2021, Tata Coffee posted a more than two-fold jump in consolidated net profit at Rs 573.7 million for the fourth quarter of the fiscal year 2020-21 on strong income.

The company had posted a net profit of Rs 240.5 million in the same quarter of the previous fiscal, according to a regulatory filing.

Net income rose by 17% to Rs 6.1 billion in the fourth quarter of 2020-21 from Rs 5.2 billion in the year-ago period.

Expenses remained higher at Rs 5.3 billion as against Rs 4.8 billion in the fourth quarter of the last year.

The company's MD and CEO, Chacko Thomas said, "Despite challenging conditions, our overall performance has been strong."

Instant coffee exports during the quarter were higher despite logistics issues and fresh wave of lockdowns in Europe, which are expected to ease in the near future.

The company has seen stable performances across key geographies.

However, the company sees slowdown in demand in some geographies in the short-term, especially in the 'out-of-home' consumption due to the COVID-19 pandemic.

Tata Coffee's subsidiary firm Eight O'Clock coffee also recorded improved performance, driven by higher sales realisations and favourable channel mix.

The board has recommended a dividend of Rs 1.50 per share for the financial year 2020-21.

Tata Coffee share price ended the day up by 2.5% on the BSE.

Speaking of the current stock market scenario, note that smallcap stocks have been on a roll recently.

The BSE smallcap index had crashed to a multi-year low of 8.6k back in March 2020. Who would have thought that in less than a year, the index will come roaring back and go up a massive 133%?

Despite the Covid-related headwinds, Indian stock markets registered their best financial year performance in a decade in FY21. While the Sensex and Nifty surged 68% and 71% respectively, gains in mid-and small-caps have been sharper with both the indices rallying 91% and 115%, respectively.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rally.

Despite rallying more than 130% since the March 2020 lows, Richa believes smallcap stocks are set for a massive up move in 2021 and beyond.

Here's what she wrote in a recent edition of Profit Hunter...

• The P/E for smallcap index doesn't make sense. There are thousands of listed small companies. Some have negative earnings. The base is not a valid data to work with.
  
  That said, the closest proxy to relative valuations is the Smallcap to Sensex ratio,
  
  Historically, this ratio has averaged 0.43x. In the previous mega runs of the smallcap index, this ratio has gone as high as 0.75x.
  
  In January 2018, when smallcaps peaked, the ratio was at 0.58x.
  
  Guess where this ratio is now after a 100% run up in the smallcap index?
  
  0.38.r
  
  It's lower than the median over 2 decades.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

Moving on to news from the IT sector...

Wipro Share Price Surge Over Revised Q1 FY22 Revenue Guidance

Wipro in an exchange filing said it expects revenue from its IT services business to be in the range of US$ 2,324 - US$ 2,367 million during the first quarter of FY22. This translates to a sequential growth of 8-10%.

During its earnings announcement for the March quarter of FY21 on April 15, the IT bellwether had guided for a 2-4% quarter-on-quarter (QoQ) growth in IT services revenue to US$ 2,195 - US$ 2,238 million.

The company revised the guidance on the completion of the acquisition of Capco, although it clarified that the new guidance does not include revenue from its recently announced acquisition of Ampion.

Wipro on 4 March 2021, had informed that it has signed an agreement to acquire Capco, a global management and technology consultancy company providing digital, consulting and technology services to financial institutions in America, Europe and Asia Pacific. The said acquisition was completed on 29 April 2021.

The software company on 15 April 2021, reported a 0.1% sequential growth in consolidated profit at Rs 29.7 billion for the quarter ended March 2020.

Meanwhile, its consolidated revenue from operations climbed 3.4% year-on-year (YoY) to Rs 162.5 billion in the recently concluded quarter.

Wipro share price ended the day up by 0.6% on the BSE.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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