Both the reference BSE sensex and broader NSE Nifty it fell more than a percent in the first operations.
These are the main factors responsible for the slide:
* Weak global signals
Asian stocks fell on Tuesday on concerns about new pandemic lockdowns in Europe and possible delays in new US stimulus. A new round of pandemic trade restrictions would threaten an incipient recovery and put even more pressure on equity markets.
Global stock markets and US futures fell on Monday due to tension between the US and China over technology and security and the prospect of tighter restrictions on public life in Europe to limit cases of coronavirus.
US stocks have tumbled over the past three weeks as investors ditched tech-related heavyweight stocks after a surprising rally that took the S&P 500 and Nasdaq to new highs.
* Increase in Covid-19 cases
In India, the total number of new coronavirus cases exceeded 55 lakh, while the death toll from Covid-19 in the United States approached 2 million. Both national indices witnessed significant selling pressure, as an increase in coronavirus cases at home and abroad affected investor confidence.
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* Metal stocks
Negative signals from global markets and outflows of foreign funds pushed metal stocks lower with Nifty Metal falling over 5% in intraday trading. At BSE, Tata Steel emerged as the main laggard, falling more than 3 percent.
* Reserve benefits
“India’s benchmark indices succumbed to earnings reserve. It was in sync with global signals that they turned negative following the surge in infections (Covid-19) in several countries, including Europe,” said one analyst.
In the previous session, sensex had finished 812 points or 2.09 percent lower at 38,034, while Nifty fell 254 points or 2.21 percent to finish at 11,251.
Meanwhile, currency data showed that foreign institutional investors sold shares worth 539.81 million rupees on Monday.
Traders also posted earnings before expiration on futures and options (F&O) contracts for the September series that expire on Thursday (September 24).
* Financial stocks fall
Banking and financial stocks fell after it emerged that several global banks moved large sums of supposedly illicit funds over a period of nearly two decades, despite red flags about the origin of the money. The reports were based on leaked Suspicious Activity Reports (SARs) filed by banks and other financial firms with the U.S. Department of the Treasury’s Financial Crime Enforcement Network (FinCen).
(With contributions from the agency)
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