Sensex below 34K: 5 factors which are causing the bloodbath on D-Street

Weak global cues led to a 1000-point cut in the S&P BSE Sensex in opening trade on Thursday which pushed the index below its crucial psychological support at 34,000 while for the Nifty50, the cut was over 300 points.

Tracking the sentiment, the Indian rupee touched a fresh record low of 74.46 per dollar. It opened lower by 10 paise at 74.30 per dollar versus previous close 74.20.

Top Sensex losers — Axis Bank , Yes Bank , Vedanta , RIL , Tata Steel , SBI , and TCS .

Sectorally, realty, auto, finance, metals, IT and banking indices fell over 3 percent each.

Here is a list of top 5 factors which could be weighing on markets:

Sell-off in US markets: worst fall in 8 months

Overnight, US markets saw their worst decline in 8 months with rising Treasury yields and trade-related worries weakening risk appetite for equity investors.

The Dow slipped 831.83 points, or 3.15 percent, at 25,598.74, the S&P was down 38.36 points, or 3.28 percent, at 2,785.68 and the Nasdaq was down 315.97 points, or 4.08 percent, at 7,422.05.

The S&P500 suffered its biggest one-day fall since February, Dow Jones index plunged more than 800 points while Nasdaq registered its biggest fall since June 24, 2016, as rising U.S. Treasury yields sent investors fleeing from risky assets, said a Reuters report.

US long-dated Treasury yields rose again in an extension of a trend over the last few weeks fuelled by solid US economic data that reinforced expectations of multiple interest rate hikes over the next 12 months, added the report.

Most of the Asian markets are also bleeding tracking weakness in US markets. Japan’s Nikkei sank 3.2 percent in early trading, which would be the biggest daily drop since March. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.9 percent to its lowest in 17 months.

Trump calls stock sell-off a correction:

U.S. President Donald Trump said Wednesday’s stock market sell-off was a correction that was long awaited, and that the Federal Reserve, which has been raising interest rates, has gone “crazy”, said a Reuters report. “I think the Fed has gone crazy,” Trump said.

IMF raises doubt on global financial stability:

Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund said on Wednesday.

“Near-term risks to global financial stability have increased somewhat,” the IMF said. “Overall, market participants appear complacent about the risk of a sharp tightening in financial conditions.”

Decision on CAATSA sanctions soon, says Trump on India

US President Donald Trump said that India "will soon find out" about his decision on the punitive CAATSA sanctions after India signed a USD 5 billion deal to purchase the much-vaunted S-400 air defence system from Russia.

Under the Countering America's Adversaries Through Sanctions Act or CAATSA sanctions, which was amended early this year, only Trump has the authority for the presidential waiver to India on weapons deal with sanctions-hit Russia, said a PTI reported.

Persistent selling by FIIs: Pulled out over 15000 cr in October

The recent fall in rupee which pushed the currency below Rs 74/USD has made returns for foreign investors slightly unattractive. Also, it looks like a rotational trade is happening as money is moving from risk assets to risk-free assets.

India which was considered a relatively safe heaven a few weeks ago is fast losing its sheen after the INR plunged to a record low and crude oil prices soared to new highs.

“The Indian market, which was a major outperformer until the first half of August, is now underperforming the MSCI EM (Emerging Market) in USD returns. Thanks to fall in rupee, the Nifty dollar returns YTD stood at a negative c.12.7%, compared with the MSCI EM at 10.6%,” Standard Chartered said in a report.

In the month of October, foreign investors pulled out more than Rs 15000 crore from Indian Capital markets.