A simple explanation to why Indian stocks tanked today

Indian stocks came under heavy selling pressure on Tuesday as traders dumped blue chips after a three-day rally and refrained from pressing the buy button owing to the monthly expiry of futures contracts this week.Technology stocks were the lone sectoral gainers on the exchanges, pointing to the defensive nature of the market.

The Nifty lost 165 points, or 2 percent to close at 7,812, near its day's low. Hindalco, Vedanta, Coal India, Tata Motors and Yes Bank were the top five losers on the Nifty where the lone stock to gain was Wipro. As a consequence the Advance-Decline Ratio was an extremely bearish 1:49.

Infosys, Motherson Sumi and Larsen were the three top traded stocks on the National Stock Exchange. Auto ancillary giant Motherson lost a whopping 7.8 percent in trade today after one of its major global clients -- Volkswagen -- was caught fudging on US emission tests between 2008 to 2015. Motherson has fallen more than 40 percent from its most recent peak of 396 rupees.

Selling pressure was higher in the broader market where the CNX 100, the CNX 200 and the CNX 500 indices lost more than 1.7 percent each. Losses of slightly less magnitude were seen on the Small Cap and the Mid Cap Index too.

The sectoral space was awash with red as well. The Bank Nifty plunged 512 points, or 2.9 percent, to 17,031 points. The CNX PSU Bank Index shed 3.2 percent and the CNX Finance Index lost 2.8 percent. Major losses were also seen in the metals, Auto and Realty spaces.
Image credit: Indiatimes

Sentiment was equally bearish on the Bombay Stock Exchange where the Sensex plunged 541 points to end the day at 25,651 points. 29 out of 30 stocks making up the Index lost ground. ICICI Bank, Tata Steel, Hero Motors, Lupin, HDFC Bank, Maruti and TCS were among the top losers.

The broader market sentiment turned in favour of the bears with 1,697 shares declining compared with 976 that rose on the Bombay Stock Exchange.

Bears controlled the Futures and Options space as well with just 9 futures rising compared with 151 that fell in the last week of the monthly expiry. Amtek Auto, Motherson, Unitech, Hindalco and Vedanta Futures were the top losers whereas the top three gainers' slots were taken up by the IT futures: Hexaware, Mind Tree and Oracle.