Sensex Sinks Nearly 500 Points, Unitech Crashes 50%

Indian stock markets are heading for their second straight day of big losses, with the BSE Sensex falling as much as 490 points and the broader Nifty declined over 140 points.

Here are 10 must-know developments:

1) The Sensex is trading below the psychological 27,000 mark, while the Nifty slipped below the key 8,100 levels for the first time since May 13, 2015.

2) The biggest selloff was seen in property stocks, with the realty sub-index on the BSE sinking nearly 10 per cent. Unitech shares crashed over 50 per cent, HDIL fell as much as 17 per cent, while DLF – India’s biggest listed realty developer, fell over 8 per cent. Jaiprakash Associates crashed 30 per cent. Unitech, DLF and Jaiprakash Associates are heavily indebted companies.

3) The Sensex and Nifty fell nearly 1.5 per cent, but the real carnage was witnessed in small cap and midcap stocks. GMR Infra slumped 15 per cent, while wind turbine maker Suzlon tanked 10 per cent. Anil Ambani-promoted companies such as Reliance Power and Reliance Communications also faced double-digit losses.

4) According to Jagdish Malkani (member NSE), midcap and small cap shares had gained sharply, so there might be an element of profit taking today.

5) Among Nifty companies, big losses were seen in cigarette maker ITC, Tata Motors, Bosch and Cairn India. All these stocks fell 4-5 per cent.

6) FMCG stocks also came under huge selloff tracking losses in Nestle, which fell as much as 10 per cent because of the ongoing controversy about Maggi noodles. Maggi contributes nearly 20 per cent to Nestle’s revenues.

7) Market analyst Rajat Bose said the Nifty has broken the 200-day simple and exponential moving averages, which does not augur well for investors. There is a possibility that the Nifty will test 8,050-7,995, he added.

8) The nearly 350-point slump in Nifty in two days may have led to margin pressures, Mr Malkani said. He added that the fall in markets could be on account of huge selloff by foreign investors. It seems that bear cartels might be jumping in, he added.

9) This is the second straight day of big selloff in domestic equity markets. On Tuesday, the Sensex had crashed 700 points in intraday trade after the RBI downgraded its growth estimate for the current year and raised inflation target to 6 per cent. The downgrade in monsoon forecast also spooked stock markets.

10) Analysts say external factors, such as the fear of US Federal Reserve raising interest rates the ongoing Greek crisis, have also spooked investors.