5 months ago
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Tensions in the Middle East, inflation data from the US, and profit-booking were some of the factors behind a steep drop in the Indian stock market on Monday
 "5 reasons why Sensex, Nifty plunged over 1% today")
Sensex and Nifty closed in the red, down by 1 per cent, on Monday. Source: Reuters
The Indian stock market witnessed a tepid Monday, with both benchmark indices- BSE Sensex and Nifty 50- plunging into the red by a little over 1 per cent.
The 30-share BSE Sensex index slipped 1.14 per cent or 845.12 points to close at 73,399.78. Shares of Wipro, ICICI Bank, and Bajaj Finserv were the top laggards in this bracket.
The broader Nifty 50 index tumbled 1.1 per cent or 246.90 points to conclude the day at 22,272.50. Stocks of Shriram Finance, Wipro, and ICICI Bank were the top losers in this index.
Bears ruled over the broader markets, too. All the indices remained in the red for most of the day on April 15.
Here’s a look at 5 factors behind the bloodbath on D-Street today:
Tensions in the Middle East: With Iran attacking Israel, and the threat of escalation of the conflict in the Middle East looming large, investor sentiment took a strong hit. Afraid of volatility hurting stock prices, some investors sold shares to avoid losses.
Hotter-than-expected inflation data: Data released by the United States Department of Labour revealed that the consumer price inflation in the US in March was 3.5 per cent, up 30 basis points from February. The hotter-than-expected inflation also spiked bond yields in the US. Firstpost had earlier reported that this was expected to hit inflows from foreign portfolio investors (FPIs) and affect the Indian markets and investor sentiment in the country. Wholesale inflation in India also rose 0.53 per cent in March. Retail inflation in the country, however, declined to a five-month low of 4.85 per cent in March.
Weak handover from US markets: On Friday, Wall Street’s three main indices reacted negatively to the inflation data. The handover from US markets being weak also affected Dalal Street.
Changes in the India-Mauritius tax treaty: The Income Tax Department on Friday said that the amended India-Mauritius protocol on the double taxation avoidance agreement (DTAA) is awaiting ratification and notification by the department. An amendment to the treaty includes a Principal Purpose Test (PPT). The test will determine whether a foreign investor only routed investments through Mauritius for gaining tax benefits. If the purpose of investment is simply tax evasion, the tax benefit would not be provided. This has sparked worries regarding additional scrutiny among genuine investors from Mauritius, too. Some of them are believed to have pulled out funds and contributed to the bloodbath on Dalal Street.
Profit-booking: Both Sensex and Nifty have been hovering around record highs recently. That made for a good level for investors to book their profits. This trend has been especially notable in mid-cap and small-cap stocks, which had higher valuations.
With inputs from agencies
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