The BSE Sensex lost 700 points while the NSE Nifty slipped below 15,400, with the BSE market capitalisation falling Rs 3.36 lakh crore to Rs 237.27 lakh crore from Rs 240.63 lakh crore a day ago.
Global cues were weak, with Asian markets down and S&P500 futures hinting at a weak start to US indices later in the day.
Here are the key reasons why the market fell on Wednesday:
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Analysts were suggesting strong resistance ahead after Tuesday’s strong gains. On Nifty50, the 15,670-15,700 range was the crucial one, as it was earlier acting as strong support for the index and was posing as resistance now, as per the principle of role reversal. Analysts had warned that a failure to cross the 15,700 level decisively could drag the index towards the 15,400 level. On Wednesday, the 50-pack index hit a low of 15,445 so far.
US Federal Reserve chair Jerome Powell is due to start his testimony to Congress later in the day, with investors looking for further clues about whether another 75-basis point rate hike is on the cards at the Fed’s July meeting. Concerns that the Fed may continue to hike rates aggressively despite looming concerns of recession in the world’s largest economy is weighing on investor sentiment. As such, there was some cautiousness among market participants ahead of Powell’s testimony.
- Weak US futures, Asian markets
The S&P500 futures were trading 0.99 per cent lower at 3,730, hinting at a weak start for US stocks later in the day. While markets such as Japan, China, and Australia edged up to 0.3 per cent lower, those in Hong Kong, Taiwan and Korea were down up to 2 per cent.
Data released overnight showed US home sales fell to a 2-year low in May. Existing home sales fell 3.4 per cent to a seasonally adjusted annual rate of 5.41 million units last month, the lowest level since June 2020 when sales were rebounding from the Covid-19 lockdown slump, Reuters reported.
- Fall in rupee, FPI selloff
The rupee depreciated 4 paise to 78.17 against the dollar in opening trade on Wednesday, tracking a muted trend in the domestic equity market and a firm dollar. weakness in the rupee intensifies foreign outflows. Data showed foreign equity outflows have topped Rs 40,000 crore in June so far, taking year-to-date Rs 2,07,195.