NEW DELHI: Equity indices plunged on Monday with the benchmark BSE sensex falling over points dragged by IT and banking stocks.
The 30-share BSE sensex fell 1,172 points or 2.01 per cent to close at 57,167. While, the broader NSE Nifty settled 302 points or 1.73 per cent lower at 17,174.
Infosys was the top loser in sensex pack falling as much as 7.27 per cent followed by HDFC twins, Tech Mahindra, Wipro and TCS.
On the NSE platform, sub-indices Nifty IT, PSU Bank, Financial Services and Bank plunged up to 4.58 per cent.
Here are the top reasons for today’s fall:
* IT, bank stocks drag the most
As companies start announcing their corporate results for the fourth quarter ended December 31, 2021, investors don’t seem to be too impressed with the numbers.
Results by Infosys, TCS and HDFC Bank missed market estimates.
In today’s session, Infosys fell per cent after the software services firm posted a consolidated net profit for the March quarter was Rs 5,686 crore ($744.24 million), lower than analysts’ expectation of Rs 5,980 crore. In terms of quarterly comparison, its profit slumped by 2.11 per cent.
That dragged the Nifty’s IT sub-index down more than 4 per cent, making it the biggest decliner among major sub-indexes.
Last week, Tata Consultancy Services also slightly missed estimates. Its shares slid per cent to a one-month low today.
On the other hand, banking index was dragged by HDFC Bank which extended losses to an eighth session, slipping 3.5 per cent after it posted March quarter results over the weekend.
The bank’s net interest margin, a key measure of profitability, contracted due to rise in share of corporate loans and slower growth in credit cards and auto loans, brokerage Jefferies said in a note.
“It was a weak set of numbers from Infosys and TCS also was a disappointment; the companies are under a lot of cost pressure and this will affect mid-cap stocks and we will see a valuation reset,” said Saurabh Jain, assistant vice president at SMC Securities told news agency Reuters.
* Oil prices soar to 3-week high
Oil prices climbed to their highest in nearly three weeks as fears over tight global supply grew, with the deepening crisis in Ukraine raising the prospect of heavier sanctions by the West on top exporter Russia.
* Inflation concerns
With global oil prices soaring again, inflation concerns have flared up in India as it imports more than two-thirds of its oil requirements.
The impact of rising crude oil prices in March is already being felt by people all across the country with prices of key food itmes and commodities rising rapidly.
Wholesale price inflation (WPI) for the month of March jumped to 4-month high of 14.55 per cent. It is the 12th consecutive month beginning April 2021 when WPI has stayed in double digits.
“The high rate of inflation in March, 2022 is primarily due to rise in prices of crude petroleum and natural gas, mineral oils, basic metals, etc owing to disruption in the global supply chain caused by the Russia-Ukraine conflict.” the commerce and industry ministry said in a statement.
Retail inflation spiked to 6.95 per cent in March — the third consecutive month that the consumer price index has breached the RBI’s tolerance limit of 6 per cent, data released last week showed.
* China lockdowns impacting economy
The shutdown and measures to control the pandemic in the country have hurt the economy and rattled global supply chains. Shanghai’s 25 million people have struggled with income losses, lack of steady food supplies, separation of families and poor conditions in quarantine centres.
Shanghai’s lockdown and wider China curbs are taking a toll on the world’s No.2 economy during a key year for President Xi Jinping, who is expected to secure a third leadership term in the autumn.
Data for March released on Monday showed that consumption and employment suffered because of Covid curbs, with economists predicting a worsening overall economic outlook.
Economic growth slid to 1.3 per cent over the previous quarter in the first three months of 2022, down from a 1.4 per cent rate in last year’s final quarter. Compared with a year earlier, a measurement that can hide recent fluctuations, growth was 4.8 per cent, up from 4 per cent in the final quarter of 2021.
* Deepening Russia-Ukraine crisis
The crisis in Ukraine doesn’t seem to be dying down soon. Ukrainian fighters were holding out against a capture of their shattered city of Mariupol after a 7-week siege, ignoring a surrender-or-die ultimatum from Russia.
Air strikes killed at least six people in Ukraine’s western city of Lviv, as Russia pounded targets across the country while massing forces for an expected all-out assault in the east.
The fall of Mariupol would be Moscow’s biggest victory of the war and free up troops to take part in a potentially climactic battle for control of Ukraine’s industrial east.
The conflict has pushed prices for oil and other commodities sharply higher, compounding difficulties for policy makers trying to nurse along recoveries from the pandemic while also tamping down inflation that is at 40-year highs in many countries.
* Global markets in red
Shares were mostly lower in Asia and U.S. futures fell after China reported Monday that its economy expanded at a 4.8% annual pace in January-March.
Benchmarks fell in Tokyo, Seoul, Taipei and Shanghai. Seoul edged higher. Markets in Europe and in Hong Kong and Sydney were closed for holidays.
Wall Street benchmarks declined last week before closing for the Easter holiday.
(With inputs from agencies)