In a dramatic downturn, investors in India’s equity market lost Rs 24.69 lakh crore in just four days, with the BSE Sensex facing a sharp decline. The negative market sentiment was triggered by multiple global factors, including soaring crude oil prices, continuous foreign fund outflows, and the rupee’s steepest single-day fall in nearly two years. A strong US jobs report further diminished expectations for an early rate cut, adding to the financial strain.
BSE Sensex Down: The BSE Sensex fell by 1,869.1 points or 2.39 per cent in four consecutive sessions. On Friday alone, the Sensex plunged by 1,048.90 points or 1.36 per cent, closing at 76,330.01. It touched a low of 76,249.72 during the day, eroding more than Rs 24.69 lakh crore in market capitalization.
Impact on Market Capitalization: By Monday, the market cap of BSE-listed firms fell below the USD 5 trillion mark, dropping to Rs 4,17,05,906.74 crore (USD 4.82 trillion). A significant portion of the market erosion occurred on Monday, when investors’ wealth decreased by Rs 12.61 lakh crore in a single session.
Reasons for the Losses:
Foreign Fund Outflows: Continuous foreign institutional investor selling, which touched over Rs 20,000 crore this month, was seen as a source of negative sentiment in the market.
Rupee Depreciation: The Indian rupee further depreciated against the US dollar following the strong US jobs data that weighed down the investor confidence.
Global Crude Prices: The global crude prices surged to a three-month peak on US sanctions on Russian supplies of crude and other uncertainties around the world.
Sectors Performance
Laggards:
The worst performing stocks were from Zomato, Power Grid, Adani Ports, Tata Steel, NTPC, Tata Motors, Mahindra & Mahindra and many more listed companies.
Losers: Only a handful of stocks, such as Axis Bank, Tata Consultancy Services, Hindustan Unilever, and IndusInd Bank, could be seen rallying during this period.
Midcap and Smallcap Falls: BSE midcap and smallcap indices fell by 4.17% and 4.14%, respectively.
Concerns Over Inflation: Crude oil price rise is expected to fuel the concerns over the domestic inflation. This might delay any rate cuts by the Reserve Bank of India (RBI) in the near to medium term.
Widespread Sector Losses: All sectoral indices on the BSE closed in the red with real estate, utilities, power, and consumer discretionary taking the worst hits. Realty stocks witnessed a huge tumble of 6.59%.
The market faces a very testing period as the macroeconomic factors continue to push the downtrend. There are various reasons behind this prolonged trend, such as uncertainty of global oil prices, foreign fund outflows, and a volatile rupee. Investors would need to monitor these trends as they take up the review of their portfolios.