Heightened tensions in West Asia and lacklustre corporate results have triggered a broad-based selloff in stocks.

BSE benchmark Sensex plummeted almost 900 points on Thursday —its sixth day of descent — to end below 64000, while the broader Nifty sank below 19000. Investor wealth wilted over Rs 3.17 lakh crore on the BSE.

Market circles said the fall was not surprising as a correction was overdue in midcap and smallcap stocks because of frothy valuations in these segments.

However, the worst may not be over yet given the grim global factors: investors are worried that the escalation of the Israel-Palestine conflict could drive energy prices upwards and hit growth.

This has resulted in institutional investors preferring safe-haven assets such as the US dollar over riskier avenues such as equities. Rising US treasury yields are another headwind.

The FPIs were net sellers of stocks to the tune of Rs 4,054 crore on Thursday.

Besides, corporate earnings have proved to be a major disappointment, generating earning downgrades and doubts over elevated valuations.

“The market was looking for some reason to correct as it was not comfortable with the valuations.

The main reasons for the fall were the worsening of geo-political tensions, rising US yield and profit booking before the upcoming elections,” Mukesh Kochar, national head
of wealth at AUM Capital, said.

He said the markets may look reasonable in terms of valuation if it corrects 300-400 points more and geo-political risk stabilises.

The Sensex opened below the 64000-mark at 63774.16 and tanked 956.08 points or 1.49 per cent to a day’s low of 63092.98. It later ended at 63148.15, thus showing a loss of 900.91 points or 1.41 per cent.

On the NSE, the broader Nifty crashed 264.90 points or 1.39 per cent to 18857.25.

Naveen Kulkarni, chief investment officer, Axis Securities PMS, said the correction has been led by geopolitical tensions and rising bond yields in the US markets.

“These challenges have a long-term impact on equities, but domestic factors in India remain encouraging.

“Our near-term advice to investors is not to panic in this market.

“Stocks that are overvalued and lack quality should be sold, while quality businesses can be accumulated at these levels.’’

ECB rate same

The European Central Bank left interest rates unchanged Thursday for the first time in over a year as the Israel-Hamas war spreads even more gloom over already downbeat prospects for Europe.

It is the bank’s first meeting with no change after a torrid pace of 10 straight increases dating to July 2022 that pushed its key rate to a record-high 4 per cent.

The ECB joins the US Federal Reserve in holding borrowing costs steady — albeit at the highest levels in years — as inflation has eased.

The ECB said its previous interest rate increases are being “transmitted forcefully” to the economy in the form of more expensive credit, which is “increasingly dampening demand and thereby helps push down inflation”.

The bank said it would keep rates high enough contain inflation “for as long as necessary.”

Liquidity meet

The Reserve Bank of India is likely to meet senior officials from some banks on November 2 and November 3 to discuss the prevailing liquidity conditions in the banking system, seven treasury officials told Reuters on Thursday.

“The central bank will meet officials at the executive director and chief general manager levels, and a discussion on the liquidity picture is on the agenda, though a formal invite has not yet come,” a treasury official from a state-run bank said.