4 Reasons Why Sensex Plunged 555 Points Today

Indian share markets wiped off early gains during closing hours, tracking weakness in global markets amid surging crude oil prices and risks associated with it.

At the closing bell, the BSE Sensex stood lower by 555 points (down 0.9%).

Meanwhile, the NSE Nifty closed lower by 176 points (down 1%).

ONGC and Tata Consumer Products were among the top gainers today.

4 Reasons Why Sensex Plunged 555 Points Today

Hindalco Industries and SBI Life Insurance, on the other hand, were among the top losers today.

The SGX Nifty was trading at 17,614, down by 216 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended down by 1.2% and 0.6%, respectively.

Sectoral indices ended on a negative note with stocks in the metal sector, healthcare sector, and consumer durables sector witnessing selling pressure.

Shares of Tata Elxsi and Marico hit their respective 52-week highs today.

US stock futures are trading on a negative note today with the Dow Futures trading down by 347 points.

The rupee is trading at 74.98 against the US$.

Gold prices for the latest contract on MCX are trading down by 0.1% at Rs 46,729 per 10 grams.

Here are 4 Factors Why Indian Stock Markets Fell Today

Weak global cues: Asian share markets witnessed huge selling after Dow Jones futures tanked, following steep rise in gas prices in the UK.

Also, Asian equities have seen heavy foreign outflows since the start of this month on concerns about China's property sector and on expectations that major central banks would raise interest rates soon amid concerns about rising inflationary pressures.

The Hang Seng and the Nikkei ended the day down by 0.6% and 1.1%, respectively.

Oil prices at multi-year high: The gains in crude oil prices are driven by concerns about energy supply, and come two days after the organization of the petroleum exporting countries (OPEC+) group of producers stuck to its planned output increase rather than raising it further.

US crude rose to its highest level since 2014 today but pared gains and was last off 0.1% to US$78.87 a barrel. Brent crude lost 0.1% to US$82.49 per barrel, having hit a three-year high in the previous session.

Evergrande crisis: Uncertainty about Evergrande's fate roiled Chinese property developers' bonds and Hong Kong-listed shares and bonds on Tuesday following fresh credit rating downgrades.

Profit booking: Apart from the above, losses were also seen as the share market succumbed to profit-booking.

In news from the travel support services sector, IRCTC was among the top buzzing stocks today.

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) hit a new high of Rs 4,512 after surging 8% on the BSE today, on the back of heavy volumes, ahead of the 1:5 stock split.

In the past week, the stock of the state-owned travel support services company has rallied 20% after the company on 29 September 2021, said that it has fixed 29 October 2021 as the record date, to ascertain the name of shareholders entitled for subdivision or split of equity shares of Rs 10 each into 5 equity shares of the face value of Rs 2 each.

On 12 August 2021, the board of IRCTC approved a stock split in the ratio of 1:5 to enhance the liquidity in the capital market, widen the shareholder base and make the shares affordable to small investors.

Another key trigger, according to market analysts, is the possibility of the stock being included in the MSCI Standard Index during the rebalancing in November.

IRCTC is the only entity authorized by the Indian Railways to provide catering services to railways, online railway tickets, and packaged drinking water at railway stations and trains in India.

It has a dominant position in online rail bookings and packaged drinking water with around 73% and 45% market share, respectively.

IRCTC's share price ended the day up by 7.1% on the BSE.

Moving on to news from the FMCG sector...

Marico Hits Record High on Healthy September Quarter Business Update

Shares of Marico rallied nearly 6% to hit a record high of Rs 590 on the BSE today after the company said it has recorded revenue growth in the low twenties with strong double-digit volume growth during the September 2021 quarter.

The stock of the personal products company surpassed its previous high of Rs 587 touched on 13 September 2021.

During the quarter, the sector witnessed improved demand trends as mobility levels increased with reducing Covid infections and accelerated vaccination drives. Discretionary categories and out-of-home consumption also visibly picked up, Marico said in the July-September quarterly update.

Parachute, VAHO continued to witness high growth whereas Saffola's growth was muted due to high base and volatility in input prices. Foods, the digital brand grew strongly in line with the company's target.

The international business delivered double-digit constant currency growth as the company witnessed positive trends in all markets, except Vietnam.

Vietnam, where a large part of our portfolio is of a discretionary nature, was in the grip of a severe Covid surge and stringent lockdown restrictions.

Among key inputs, copra prices corrected further, crude remained firm, while edible oil prices oscillated at higher levels. Gross margin is expected to improve marginally from the previous quarter but will be under pressure on a year-on-year (YoY) basis due to much higher input costs over the last year.

Operating margin is also expected to contract on a YoY basis given the arithmetic effect of significant pricing growth in the topline. As a result, the company expects modest bottom-line growth in the quarter.

Marico's share price ended the day up by 1.1% on the BSE.

Speaking of the FMCG sector, have a look at the chart below which shows the performance of BSE Sensex and BSE FMCG index since 2009.

While Sensex has offered more than 393% returns since 2009, the BSE FMCG index has gone up a staggering 532% returns over the same period.

Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

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