Explained: What Led To The Bloodbath In Indian Markets Today? Sensex Slips 366 Points, Nifty Shed 121 Points

Sensex and Nifty 50 were bleeding on Friday owing to a broad-based selloff across sectoral indices. Both the benchmarks have dipped by around a per cent before ending below their critical mark of 65,000 and 19,300. All indices on a broader and sectoral basis faced the wrath of bears. Views related to potential rate hikes from US Fed's chair Jerome Powell later in the day during his speech at Jackson Hole has heavily soured investors' mood. Also, RBI's minutes have indicated of potential hike as domestic inflation remains elevated. India's volatility index surged 3.3% today.

Sensex ended at 64,886.51, down by 365.83 points or 0.56%, while Nifty 50 dipped by 120.90 points or 0.62% to end at 19,265.80. In the broader market, BSE Sensex Next 50 nosedived by 537 points, while Midcap stocks took a huge blow as well with a downside of 262 points. However, smallcap index selloff was limited to 87 points lower.

In terms of sectoral indices, the BSE Capital Goods index was the top bear with a contraction of 574 points, while the Consumer Durables, Healthcare and Metal index also shed 293 points, 256 points and 240 points respectively. Auto, IT and banking stocks also struggled! Bank Nifty slipped by 265 points.

Heavyweights like Bajaj Finance, Asian Paints, Bharti Airtel, Titan, and ICICI Bank were top gainers. While top losers are IndusInd Bank, JSW Steel, L&T, Ultratech Cement, and Jio Financial Services.

Notably, Jaiprakash Associate was the stock of the day, skyrocketing by over 13.2% on BSE, while Shoppers Stop was the worst hit with a decline of 13%.

Of the total 3,763 stocks listed on BSE, 1,494 stocks advanced, while 2,145 stocks declined and 124 stocks remained unchanged. A total of 197 stocks struck their new 52-week highs, while 20 stocks hit fresh 52-week lows. Further, 14 stocks touched upper circuits and only 3 hit lower circuits.

As of August 25, the BSE-listed firm's market cap stood at Rs 306.84 lakh crore.

What drove the bloodbath in domestic equities?

Vinod Nair, Head of Research at Geojit Financial Services said, "Investor caution is evident globally, as concerns about potential rate hikes dominate the prevailing sentiment ahead of the Jackson Hole meeting. Furthermore, the minutes from the RBI MPC meeting reiterated their dedication to managing inflation within the target range, given the elevated domestic inflation levels. However, the expectation of a rate hike remains subdued, as the current high inflation is perceived as transitory."

Also, S Ranganathan, Head of Research at LKP securities said, "Benchmark Indices opened weak in line with global cues ahead of the FED meet and Powell's speech today. Back Home all sectoral indices ended in the red with even the Midcap Index down over a percentage. D-Street Bulls preferred to wait until Monday for the big AGM which probably could be of interest to investors."

Further, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Markets traded under pressure and lost over half a percent, in continuation of Thursday's decline. Initially, Nifty opened gap-down and remained range bound till the end. It finally settled around the day's low to close at 19265.80 levels. All sectors traded in sync with the benchmark wherein realty, metal and pharma were the top losers. And, we saw profit taking in the broader indices too."

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services does not expect a dovish remark from Power at the meeting. He said, "The US economy is exhibiting strength with GDP growth around 2%, consumer inflation at 3.2% and unemployment at 3.5%. The trends in these important indicators will be watched by the Fed and its message will be influenced by the latest data on these macros. The Fed is unlikely to sound dovish."

In the trading week from August 21 to 25th, Sensex shed 156.51 points or 0.24%, while Nifty 50 ended lower by 97.45 points or 0.50%.