Nifty, Sensex see biggest intraday fall in 3 months—Factors that led to stock market crash today

Bears took control of Dalal Street as the Indian market fell around two per cent in late afternoon trade on Friday. The broader Nifty50 traded near 17,500, while the Sensex took a beating of more than 1100 points to trade below 58,800 amid volatility. The market came under attack from all corners as midcap and small cap stocks, which have been performing comparatively better than their large cap peers for the past couple of weeks, also came under strong selling pressure. Nifty Midcap declined around 2.7%, while the small cap dropped by 2.3% an hour before closing. Among sectors, Auto, IT, Media and Realty declined the most as the indices corrected up to three per cent, while all other indices slipped deep in the red.  

Weak global cues amid inflated inflation  

Weak global markets, sharp uptick in US bond yield and rising global inflation and fears of inflation remained the major triggers that helped bears dominate the market on the last trading day of the week.  

"Indian equity markets are witnessing some selling pressure after a long period of resilience. Global cues continuously remain weak as there is a sharp surge in the dollar index and US bond yields post US inflation numbers," said Santosh Meena, Head of Research, Swastika Investmart Ltd. on Market 

As per Meena, the domestic market may continue to outperform, but it can't remain in isolation for a long time.  

Fears of Aggressive rate hike post inflated inflation numbers in US 

Another major factor is a chance of aggressive rate hike by the US Federal Reserve in its upcoming meeting.  

"Global markets are looking nervous ahead of the FOMC meeting, because there is talk of a 100-basis rate hike, while a 75-basis rate hike was already discounted," said the expert.  

Reversal in FIIs data  

Foreign Institutional investors (FIIs) sold to the tune of Rs 2668.19 crore in the domestic cash market in the last two trading sessions amid negative sentiment. They sold equities worth Rs -1,397.51 crore and -1,270.68 on September 14 and 15 respectively in the Indian market, as per exchange data. However, they remained net buyers in September with a Rs 5176 crore purchase so far this month.  

Nifty slipping below 20-DMA of 17700   

On Monday, Nifty slipped below its 20-DMA (Day Moving Average) and traded near 17, 500.  

Technically, Nifty is facing resistance at the 18100 level and it has slipped below its 20-DMA of 17700 which may lead to some more selling pressure, where 17470-17400 is an immediate demand zone, then 17150 is a sacrosanct support level, said Swastika Investmart Ltd. Head of Research.  

"Banknifty is outperforming but yesterday, it ended at a day's low after hitting a fresh all-time high, which is a little disappointing. On the downside, 40900-40700 is an immediate demand zone; below this, 40270 is the next important support level," he added.