SENSEX drops over 650 points, NIFTY50 below 23,250; Here is why markets are falling

The Indian equity benchmarks nosedived on Thursday, September 24, ahead of weekly expiry of SENSEX futures and option contracts as investor sentiment took a knock tracking a sharp surge in crude prices while 10-year US bond yield surged to its highest level since 2007.

The SENSEX fell as much as 707 points and NIFTY50 index touched an intraday low of 23,205 dragged down by losses in index heavyweights like Bajaj Finance, Axis Bank, HDFC Bank, Kotak Mahindra Bank, Reliance Industries and Bajaj Finserv.

As of 9:25 am, the SENSEX was down 588 points at 74,240 and NIFTY50 index dropped 207 points to 23,240.

Surging crude and rising bond yields

Brent crude hovered around $102.5 a barrel on Thursday after gaining 4% in the previous session.

Weak global markets

US stocks ended sharply lower on Wednesday after US bond yields spiked to 5.14%, back to where it was in 2007 before the global financial crisis caused yields to crater, tracking a surge in inflation amid crude oil halted its slide.

Dow Jones Industrial Average dropped 0.7%, S&P 500 index declined 0.75% and Nasdaq index fell 1.13%.

In Asia, China's Shanghai Composite index declined 0.6%, Hong Kong's Hang Seng dropped 0.55% while Japan's Nikkei advanced 1.55%.

Sectoral landscape

Selling pressure was broad-based as all the major sector gauges compiled by National Stock Exchange, barring the measures of pharma and IT shares, were trading lower dragged down by NIFTY Financial Services index's 1.7% fall.

NIFTY Bank, Private Bank, Auto, Metal, PSU Bank, Realty, and Oil & Gas indices also fell between 0.65% and 1.7%.

Broader markets were also facing selling pressure as NIFTY Midcap 100 index tumbled 1.11% and NIFTY Smallcap 100 index declined 0.74%.

Shares of insurance companies like Max Financial Services, HDFC Life, PB Fintech, Star Health and Turtlemint Fintech Solutions among others fell up to 20% after the insurance regulator IRDAI has proposed a wide-ranging overhaul of insurance distribution, including curbs on ‘dark patterns’, lower expense limits and changes to commission structures.

IRDAI has issued a consultation paper on 'Recalibrating Economics of Insurance Distribution', setting out a comprehensive framework of reforms covering insurance distribution, its structure, expenses, commissions, market conduct, transparency and leveraging digital infrastructure.

The insurance regulator proposes to replace the existing complex and fragmented architecture with three broad categories of distribution entities: Insurance Distribution Entities (IDEs), Insurance Distribution Persons (IDPs) and Market Infrastructure Institutions (MIIs).

NIFTY50 top gainers and losers

HDFC Life was top loser in the NIFTY50 index, the stock fell 8% to ₹516. Bajaj Finance, Axis Bank, Bajaj Finserv, Kotak Mahindra Bank, InterGlobe Aviation Hindalco, HDFC Bank, Max Healthcare and Asian Paints also fell between 1.15% and 4.1%.

On the flip side, SBI Life, Tech Mahindra, ICICI Bank, Sun Pharma, Tata Steel, HCL Technologies, Titan and NTPC were notable gainers in the NIFTY50 index.

The overall market breadth was extremely negative as 2,001 shares were declining while 957 were advancing on the NSE.