Explore the impact of global turmoil as Sensex crashes over 1600 points, erasing Rs 4.7 trillion in investor wealth. Dive into the details of the market meltdown, uncovering concerns, and assessing the fallout of domestic and international factors.
In a tumultuous trading session, Indian equity markets witnessed a sharp decline, with the BSE Sensex crashes over 1600 points and the Nifty slipping below the 21,600 level. The sell-off, fueled by weakness in global cues, particularly in Asian and US markets, extended for the second consecutive session, erasing nearly Rs 4.7 lakh crore of BSE market capitalization. Here’s a detailed look at the market meltdown.
Key Points:
- Market Performance:
- BSE Sensex dropped by 1,630 points (2.23%) to 71,498.
- NSE Nifty fell by 456 points (2.07%) to 21,576.
- Market Cap Erosion:
- The fall in domestic indices resulted in the erosion of almost Rs 4.7 lakh crore in BSE market capitalization.
- Investor wealth, measured by BSE market cap, decreased from Rs 374.95 lakh crore to Rs 370.25 lakh crore.
- Global Factors:
- Weak global cues, particularly a slowdown in China’s economic growth in the December quarter, contributed to the market decline.
- Overnight, Wall Street also closed lower as a Federal Reserve official suggested caution in rushing to lower interest rates, tempering expectations of early rate cuts.
- Stock Movements:
- Frontline stocks such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, SBI, Tata Steel, M&M, and Bajaj Finance were major contributors to the market fall.
- Specific stocks, including HDFC Bank, Indian Energy Exchange (IEX), Zomato, Lodha, Prestige, SAIL, Finolex Industries, Alembic Pharma, and Vedant Fashions, witnessed declines of up to 7.01%.
- Market Breadth:
- Out of 3,713 stocks, 2,190 saw declines, 1,391 advanced, and 132 remained unchanged.
- 15 stocks hit their 52-week lows, while 223 touched their one-year highs.
- Sectoral Impact:
- Banks, financials, and metals were among the top drags on the market, with HDFC Bank, ICICI Bank, and Kotak Mahindra Bank alone contributing significantly to the decline.
- On NSE, 12 out of 15 sub-indices were down, with Nifty Bank, Nifty Financial Services, and Nifty Metal experiencing sharp falls.
- FII-DII Activity:
- Foreign institutional investors (FIIs) bought Rs 656.57 crore worth of shares, while domestic institutional investors (DIIs) sold Rs 369.29 crore worth of equity during the previous session.
- Global Market Snapshot:
- Asian markets were trading lower, with South Korea’s Kospi down 2.25%, Hong Kong’s Hang Seng falling 3.05%, and Japan’s Nikkei index remaining flat.
Unprecedented Fall in Domestic Indices
The BSE Sensex, a key benchmark, recorded a staggering fall of 1,630 points, representing a 2.23% decline, closing at 71,498. Simultaneously, the NSE Nifty witnessed a drop of 456 points or 2.07%, settling at 21,576. The severity of the fall highlights the underlying concerns and uncertainties prevailing in the market.
Global Factors Aggravate the Downturn
The Indian market’s downturn was exacerbated by negative developments in global financial landscapes. Asian markets experienced a decline following China’s lower-than-expected economic growth in the December quarter. Wall Street also faced losses as a key Federal Reserve official advised against rushing into rate cuts, dispelling hopes of an early reduction.
Market Metrics: Wealth Erosion and Stock Performance
The market capitalization, a key indicator of investor wealth, took a substantial hit, witnessing a decline of Rs 4.69 lakh crore to Rs 370.25 lakh crore. Noteworthy contributors to this decline included heavyweight stocks such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, SBI, Tata Steel, M&M, and Bajaj Finance.
A concerning aspect was the 15 stocks hitting their 52-week lows, with companies like Radiant Cash Management Services and Sanmit Infra reaching their lowest levels. On the flip side, 223 stocks touched their one-year highs, showcasing a mixed trend in the market.
Sectoral Impact: Banks, Financials, and Metals Bear the Brunt
The banking, financial, and metal sectors were among the hardest hit, with major players like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, SBI, Tata Steel, M&M, and Bajaj Finance contributing significantly to the decline. HDFC Bank, ICICI, and Kotak Bank alone contributed negatively to an 882-point decline in Sensex.
On the NSE, 12 out of 15 sub-indices were down, with Nifty Bank, Nifty Financial Services, and Nifty Metal witnessing sharp falls.
Institutional Trading Activity
Foreign institutional investors (FIIs) bought Rs 656.57 crore worth of shares on a net basis during the previous session, while domestic institutional investors (DIIs) sold Rs 369.29 crore worth of equity. This indicates a mixed sentiment among institutional investors.
Global Market Overview
On the global front, Asian markets continued to trade lower, with South Korea’s Kospi index down 2.25%, Hong Kong’s Hang Seng tanking 3.05%, and Shanghai Composite index slipping 0.98%. Japan’s Nikkei index remained flat, indicating widespread concerns across the region.
In conclusion, the sharp decline in domestic indices, coupled with global economic uncertainties, has created a challenging environment for investors. The market’s resilience in the coming sessions will be closely watched as stakeholders assess the impact of both domestic and international factors.