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5 Reasons Why Sensex Crashed 600 Points Today
Wed, 28 Oct Closing | Monish Vora, TM Team

Indian share markets witnessed a sharp sell-off today and ended their session deep in the red.

Benchmark indices witnessed selling which was largely led by losses in finance and banking stocks.

At the closing bell, the BSE Sensex stood lower by 600 points (down 1.5%).

The NSE Nifty closed lower by 160 points (down 1.3%).

HDFC and IndusInd Bank were among the top losers today.

The SGX Nifty was trading at 11,722, down by 165 points, at the time of writing.

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The BSE Mid Cap index ended down by 0.9%. The BSE Small Cap index ended down by 0.8%.

On the sectoral front, stocks from the banking sector and finance sector bled the most, falling more than 2.2% each.

Asian stock markets too ended on a negative note, with the Hang Seng and the Nikkei ending down by 0.32% and 0.29%, respectively.

Gold prices were trading down by 0.3% at Rs 50,825 per 10 grams at the time of writing.

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The rupee is trading at 73.91 against the US$.

New: 5 Pandemic-Proof Smallcaps You Should Know About...

Here are Top 5 Factors Why Indian Stock Markets Crashed Today

Rising Coronavirus Infections: The United States, Russia, France and other countries have registered record numbers of coronavirus infections in recent days. Mainland China also reported increase in virus infections. Furthermore, European governments have introduced fresh movement restrictions as the coronavirus infections, hospitalization, and deaths increased sharply again. Stock markets across the world corrected taking cues from these restrictions which ultimately could impact global growth.

US Presidential Elections: Stock market participants were cautious ahead of the US presidential elections scheduled to be held next week on November 3. Reports indicated that there could be tough competition between Republican Donald Trump and Democrat Joe Biden.

Weak Global Cues: Indian share markets opened amid muted global cues with weaker Asian markets and stocks in Europe falling sharply. European shares fell on reports of potential lockdowns in Germany and France, losing 2.5% to hit five-month lows and rattled by a media report that France might bring in a national lockdown from midnight on Thursday.

US Stimulus Hopes Fade: Stock markets also witnessed selling as investors lost hope that a US fiscal stimulus would be approved before the presidential election. US President Donald Trump clearly stated that there won't be coronavirus relief bill before election, which has not yet cleared amid several negotiations between Republicans and Democrats.

Banking and Finance Stocks Bleed: Banking and finance stocks witnessed most of the selling pressure today. The Nifty Bank and Financial Service indices fell more than 2% each. IndusInd Bank, Kotak Mahindra Bank, SBI, Federal Bank, ICICI Bank, HDFC Bank, Axis Bank, and Bank of Baroda were down in the range of 1.5% to 3%.

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!

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Speaking of the banking and finance sector, note that the market crash impacted all stocks, but finance stocks took the worst hit.

Even as the Sensex made a comeback to pre-Covid levels, the slowdown and asset quality concerns amid the moratorium extension, is an overhang on the financial sector. This is evident in the chart below:

Richa Agarwal, lead Smallcap Analyst at Equitymaster, expects a long road to recovery for this sector.

Here's what she wrote about it in one of the editions of the Profit Hunter:

  • Just to be sure, being cautious in this sector makes sense to me. However, I believe it would be folly to paint all financial stocks with the same brush.

    Financials, especially NBFCs, have gone through multiple disruptions and challenges in the last few years - demonetisation, the IL&FS crisis, and now...coronavirus and moratoriums. This has led to a liquidity squeeze for these players, due to a risk aversion attitude among investors and lenders.

    The streak of disruptions will force inefficient and unorganised players in this sector to scale back. I also see a consolidation happening. The survivors and beneficiaries of this shift will be the well capitalised companies with balanced growth and high asset quality.

    Investors who identify these stocks now and are willing to be patient with returns, will be rewarded with huge rebound gains.

Richa recently recommended one such stock - a high quality NBFC. Subscribers can read the report here (requires subscription).

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In this video below, Vijay shares how you could have made up to Rs 300,000 in just three trading sessions from the recent sharp move in these stocks.

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Moving on to stock specific news...

Bharti Airtel was among the top buzzing stocks today.

Shares of Bharti Airtel witnessed huge buying interest today after the National Securities Depository (NSDL) increased the company's foreign ownership limits to 100%.

According to the NSDL website, the limit was 49% and approval for 100% foreign limit was pending.

Stock market experts are of the view that with Bharti Airtel being able to obtain the FII limit at 100%, MSCI is likely to increase weightage in the company. After MSCI increases weightage, Bharti Airtel shares can see inflows of Rs 150-200 billion.

Bharti Airtel share price was also in focus as it reported its highest ever quarterly consolidated revenue on the back of a rise in data usage and higher realizations, helping it narrow losses for the quarter ended September.

The company's consolidated revenue rose 22% to Rs 257.8 billion during the September quarter while net loss narrowed to Rs 7.6 billion. This was bolstered by an all-round growth across the portfolio and rise in Average Revenue Per User (ARPU) as well as strong 4G additions.

4G data customers increased by 48% to 152.7 million compared to the previous year.

The company said that with respect to engagement parameters, it continues to be "best in industry" with average data usage per data subscriber at 16 GB per month and voice usage at 1,005 mins/subscriber/month.

The company's losses were significantly lower than the year-ago period after the company made provisions of Rs 284.5 billion in the immediate aftermath of the Supreme Court ruling on statutory dues.

Note that sector analysts have predicted that revenues for mobile operators will improve sequentially in the September quarter as factors such as increased recharges, reverse migration, and easing of lockdown curbs would help overcome what is otherwise a seasonally-weak quarter.

Airtel is the first of the three private telecom operators to announce its quarterly results this earnings season. Vodafone Idea's second quarter numbers are scheduled on October 29 while Reliance Jio will announce its September quarter results on October 30.

We will keep you updated on all the news from this space. Stay tuned.

In other news, Titan Company, a part of the Tata Group, reported 37.8% year-on-year (YoY) decline in net profit at Rs 1.9 billion for the second quarter ended September 30, 2020. The homegrown consumer goods company had posted net profit of Rs 3.2 billion in the same period last year.

The company posted 1.7% YoY decline in total income at Rs 43.8 billion in Q2FY21. The decline in total income excluding gold sale was around 11% YoY. The total income for the quarter include sale of gold to the extent of Rs 3.9 billion.

For the first half of the fiscal 2020-21 (April-September period), the total income was Rs 62.9 billion (including gold sale of Rs 9.9 billion). This was a decline of 34% against the income of Rs 94.6 billion in the corresponding period last year. The decline without considering the bullion sale was 44% YoY.

As on September 30, 2020, the company's retail chain (including CaratLane) stands at 1,832 stores, with a retail area crossing 2.4 million square feet for all its brands covering 290 towns.

With the lockdowns being lifted in most parts of the country, the company said it was able to operate most of its stores across all its divisions.

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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Stock Market Updates

TATA STEEL at 52 Week High; BSE 500 Index Up 1.0% (Today's Market)

Nov 26, 2020 02:54 PM

TATA STEEL share price has hit a 52-week high. It is presently trading at Rs 570. BSE 500 Index is up by 0.6% at 16,878. Within the BSE 500, TATA STEEL (up 5.0%) and SIEMENS (up 11.1%) are among the top gainers, while top losers are GE POWER INDIA and FUTURE RETAIL.

JSW STEEL Share Price Up by 5%; BSE METAL Index Up 3.7% (Today's Market)

Nov 26, 2020 02:54 PM

JSW STEEL share price is trading up by 5% and its current market price is Rs 356. The BSE METAL is up by 3.7%. The top gainers in the BSE METAL Index are JSW STEEL (up 5.0%) and JINDAL STEEL & POWER (up 5.8%).

TATA STEEL Share Price Up by 5%; BSE METAL Index Up 3.8% (Today's Market)

Nov 26, 2020 02:52 PM

TATA STEEL share price is trading up by 5% and its current market price is Rs 570. The BSE METAL is up by 3.8%. The top gainers in the BSE METAL Index are TATA STEEL (up 5.3%) and JSW STEEL (up 5.1%).

SIEMENS Share Price Up by 11%; BSE CAPITAL GOODS Index Down 0.1% (Today's Market)

Nov 26, 2020 02:08 PM

SIEMENS share price is trading up by 11% and its current market price is Rs 1,512. The BSE CAPITAL GOODS is down by 0.1%. The top gainers in the BSE CAPITAL GOODS Index is SIEMENS (up 10.8%). The top losers are SADBHAV ENGINEERING (down 0.1%) and SKF INDIA (down 0.4%).

DIXON TECHNOLOGIES at All Time High; BSE CONSUMER DURABLES Index Up 0.7% (Today's Market)

Nov 26, 2020 01:48 PM

DIXON TECHNOLOGIES share price has hit an all time high at Rs 11,280 (up 3.3%). The BSE CONSUMER DURABLES Index is up by 0.7%. Among the top gainers in the BSE CONSUMER DURABLES Index today are DIXON TECHNOLOGIES (up 3.3%) and TITAN (up 1.1%). The top losers include TTK PRESTIGE (down 0.4%) and CROMPTON GREAVES CONSUMER ELEC. (down 0.9%).

Sensex Opens Marginally Higher; L&T and Bajaj Auto Top Gainers (Today's Market)

Nov 26, 2020 09:30 am

Indian share markets open marginally higher. The BSE Sensex is trading up by 101 points, while the Nifty is trading higher by 37 points.

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Nov 26, 2020 03:02 PM