Sensex closes 561 points lower, Nifty fails to reclaim 10,500

Benchmark indices today recovered to an extent, with the benchmark Nifty closing within spitting distance of 10,500 level while S&P BSE Sensex closed 1.61% lower at 34,195.94. 
 
In the morning trade, the Sensex fell over 1,200 points and Nifty50 dipping below 10,300 points, biggest falls in six-and-half years after the US wage data on Friday pointed to quickening inflation which may lead to higher rates by the US Federal Reserve. 
 
On the Nifty50, only 5 stocks advanced while  45 fell, indicating a bearish sentiment. 
 
On the Sensex, Tata Motors, TCS, Infosys, Hero MotoCorp, SBI and Kotak Bank among scrips that led the bloodbath.
 
At 2.43 pm, benchmark Nifty was trading at 10,548.60 points,  1.11% lower than the previous day's close. 
 
According to the BSE data, investors lost nearly Rs 5 lakh crore right after the opening bell.
 
While the Finance Ministry said that global markets, not the imposition of long-term capital gains has caused the market fall, investors beg to differ. 
 
“LTCG may not have caused the market fall, but it did aggravate it,” said Basant Maheshwari, Wealth Advisers LLP. 
 
Samir Arora, of Helios Capital also noted the government has imposed LTCG without thinking about the repercussions. "Just because something applies in global markets doesn't mean it has to happen in India too. With 10 per cent LTCG tax, I would say Indian markets have turned 10 per cent unattractive," he said. 
 
However, Deepak Jasani, head of retail research at HDFC Securities believes domestic as well as global factors are at play behind the market fall.  
 
"The unprecedented downfall in Dow yesterday and combination of other negative factors like the high fiscal deficit projected and proposal on LTCG and fear of the stand that RBI will take during Wednesday's review has led to this melt-down or selling panic," said Jasani.
 
"Not just India but globally this downturn has taken place due to the fear of high interest rates regime, coming into the developed markets amid high valuations. On the domestic front other factors like high valuations, uncertainties on growth, inflation and interest rates and fears of RBI turning hawkish are unnerving investors," he added. 
 
Meanwhile, oil prices dropped by more than 1% today, extending falls from the previous session as global financial markets tumbled.

Brent crude futures were at $66.91 per barrel at 0530 GMT, down 71 cents, or 1.1%, from the previous close. That was more than $4 below their high-point for 2018, hit last month, a Reuters report said.