Bears have taken hold of the Indian stock markets in trade on November 22, 2021 with a drag of 1070 points on the Sensex and Nifty at 17454, down 1.75 percent or over 300 points. India VIX too has climbed by 15 percent. Broader markets too have been knocked down with Nifty Midcap down by over 2.7% at the time of writing this report.
There has been seen across the board selling with all the Nifty sectoral indices trading with deep cut. Realty, PSBs and auto sector contributed to the highest fall.
Here we list out the probable reasons for the market crash today:
1. Heavyweight stocks weigh:
Reliance Industries in trade today tumbled by over 4 percent to day's low price of Rs. 2356.25. This is after the conglomerate took a decision to call off stake sale plan of its oil to chemical (O2C) business to Saudi Arabia-based Aramco.
Other Nifty stocks that pulled indices down include Bajaj twins, HDFC Bank and Tata Motors among others.
2. Spiking inflation level poses risk of interest rate hike sooner than called for:
In the US, the annual inflation rate increased to 6.2 percent in October this year, which is the highest level in 3 decades and hence continuing inflationary pressure are setting the stage for earlier interest rate hike in the economy. Higher rates drive foreign investors' to take their money out from the emerging markets which weigh on the street.
Contradicting the ECB's official call, Bundesbank president Jens Weidmann publicly iterated that inflation may continue to remain above 2 percent for some time and the ECB should avoid making any commitment to keeping the money taps open.
3. Covid led lockdowns being enforced again in some countries:
Global sentiment turns sluggish as fresh Covid cases are being reported in Europe. Meanwhile, Austria has announced that it will again enforce corona led lockdowns for fighting an increase in new infections and also make vaccination compulsory in due course. Some other countries bringing in rules to curb the spread of the lethal virus include Germany, Slovakia, the Czech Republic and Belgium.
4. Global markets:
European stock futures trade higher, while Asian markets traded mixed. Hang Seng and Taiwan weighted index fell, while Kospi and Nikkei gained.
5. Crude oil price declines:
After key oil consuming nations including the US mulled on releasing some of their stockpile, oil prices edged lower. This has been considered primarily to curb rise in crude oil price. WTI crude with minor gains has come down to levels of $76.05 per barrel.
"The markets have seen some drawdown over the past week and giving a good opportunity for entry to quality stocks. The Nifty50 seems to trade with the support of 17,700 with resistance at 18,000 while Bank Nifty has support of 37,500 with resistance of 38,450," Mohit Nigam, Head - PMS, Hem Securities is quoted in a business daily report as saying.