Sensex, Nifty crash 1% each intraday: 5 reasons behind today's downfall

Indian Stock Market News Today: Bank of Japan’s decision to widen yield target range did not go down well with Asian stock markets as frontline indices across geographies crashed on Tuesday. The Indian stock market story was no different as S&P BSE Sensex and NSE Nifty50 tumbled on this news. Sensex was trading at 61,243.93 and was down 562.26 points or 0.91 per cent while Nifty50 was trading over 172 point or 0.94 per cent lower at 18,247.90. Banking gauge Nifty Bank was trading at 43,083.75. 

Here are 5 factors that have triggered today's fall: 

1) Japanese Central Bank’s decision to widen its bond yield target range has come as a surprise for stock markets. From an initial range of +/-0.25, the and has now been increased to +/-0.50. This triggered over 2 per cent upward move in Yen against the USD which is highest in 5 months. 

2) Indian markets reacted sharply to this news along with Japan’s Nikkei while fell over 750 points or nearly 3 per cent. China’s Shanghai Composite also fell over 1 per cent. 

3) Many Indian companies are likely to get impacted from this, especially those who owe royalty payments to Japanese companies. One such company is Maruti Suzuki which paid 3.6 per cent of its net income in FY21 to parent Suzuki Motocorp as royalty. Import in yet also accounted 7-8 per cent of their total annual sales. Another company which will likely get impacted is Lumax which pays royalty to Stanley Electric. JTEKT will also get impacted from this. 

Read More: Stock Market Today LIVE: 640 point crash in Sensex; Nifty tumbles 200 points on Japan bond yield shocker

4) US markets have closed on negative note on four occasions since the announcement of Fed policy rates on 14 December. That has dented the global market sentiments. The second round of selling in the global markets is occurring in response to the hawkish US Fed policy, which is also exerting pressure on Indian equity markets, Santosh Meena, Head of Research, Swastika Investmart Ltd said. Institutional investors are concerned about the premium valuations despite the robust fundamentals of the Indian equity markets, he opined.  

5) China Factor: "While a recession is a fresh fear for international equity markets, higher interest rates are a major concern in the near term," Meena said. China kept benchmark lending interest rates unchanged for the fourth consecutive month on Tuesday, matching the forecasts of most market watchers who nevertheless expect further monetary easing to prop up a slowing economy, Reuters reported. 

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)