Sensex ends nearly 400 points lower: Here are key factors behind the market fall

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Benchmark equity indices declined for the second trading session and closed with modest losses on Monday. The Nifty managed to close above the 14,900 level after slumping below 14,800 in the intraday. Rising domestic inflation and increase in COVID-19 cases sapped investor’s appetite for risk assets. The S&P BSE Sensex dipped 397 points or 0.78% at 50,395.82. The Nifty 50 index lost 101.45 points or 0.67% at 14,929.30.

Rahul Shah, VP-Equity Advisory, Motilal Oswal Financial Services said, “Some kind of profit booking, US bond yield which is at one year high, WPI numbers which came below expectations and soaring Covid-19 cases are weighing market sentiment.”

Here are the top factors behind the market crash today:

Inflation: India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.03% in February, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Friday. The retail inflation was 4.06% in January 2021 and was 6.58% in February 2020.

IIP: Separately, India’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a contraction of 1.6% in January 2021. The industrial output rose by 1% in December 2020 and grew by 2% in January 2020.

FPI outflow: Some selling by foreign institutional investors (FII) also dampened the market sentiment. FIIs sold shares worth Rs 942 crore on Friday with gross purchases and gross sales stood at Rs 12,080 crore and Rs 13,023 crore, respectively.

Selling by DIIs: Domestic institutional investors (DIIs) were also net sellers to the tune of Rs 163.87 crore in the domestic equity market on March 12.