Mumbai: With Brent firmly trading significantly above the psychologically important $100/barrel mark, US 10-year yield at two-decade high at over 5%, India 10-year at above 7.1%, and rupee weakening close to 96/$, Dalal Street investors pressed the panic button on Tuesday. As a result, sensex lost about 1,400 points from the day’s high and closed 778 points or 1% down at 74,004 points, an over five-month low level. The rising retail inflation, partly due to rising crude prices, is also a concern for market players and investors.Tuesday’s sell-off was more pronounced in small-cap and mid-cap stocks than in the large caps. This led to BSE’s market cap plunging nearly Rs 9.2 lakh crore to settle at Rs 472.4 lakh crore, official data showed.The selling was led by foreign funds that net sold stocks worth nearly Rs 3,000 crore, while domestic funds were net buyers at almost Rs 2,700 crore, BSE data showed.According to Siddhartha Khemka, head of research – wealth management, Motilal Oswal Financial Services, Indian markets are likely to remain weak amid elevated crude prices, renewed inflation concerns and uncertainty ahead of the US Federal Reserve’s policy decision.“Brent crude rose 2.3% to around $108/bbl amid unresolved geopolitical tensions and supply concerns, adding to inflationary pressures. Meanwhile, India’s retail inflation accelerated to a 20-month high of 4.82% in Aug, raising concerns over the scope for further monetary easing and increasing expectations of a tighter RBI policy stance.”The rising inflation and crude prices pushed the 10-year G-sec yield to 7.09%, a four-month high, further raising concerns over a tighter domestic rate environment, Khemka said.CAS effect: Nifty plunges 463 points in one minuteDuring the closing auction session (CAS) on Tuesday, the day Nifty weekly contracts expired, the index lost about 460 points (2%) in just one minute, between 3.20pm and 3.21pm, but soon recovered to eventually settle the session with a 280-point loss at 23,119 points. While the recently introduced CAS has resulted in substantial volatility in stock prices and some of the leading indices, the volatility has been more pronounced on days derivatives contracts–weekly and monthly–expired. TNN
