Investors Lose ₹9.78 Trillion in a Day as Indian Stock Markets Collapse
Nearly ₹9.78 billion fell in investor value on Wednesday as the Indian stock market posted its biggest day decline in two months. The market capitalization of each BSE-listed company fell from ₹474 billion on Tuesday to ₹465 billion on Wednesday. India’s benchmark indices fell more than 2%, and at its lowest point, total market capitalization had sunk to a staggering ₹10.5 billion
What Caused Today’s Market Crash?
Rising tensions in the Middle East, especially the growing tensions between Iran and Israel were the major reasons for the sharp fall in the Sensex and Nifty yesterday with the Nifty falling 50 547 (2.12%) to end at 25,250, period with Sensex up by 1,769 points (2). 10%) down to finish with 82,497 points. Both indices lost more than 3.5% of their value in the process for the fourth consecutive day.
There were other factors that were not the current state of geopolitics. The market was highly volatile for several reasons:
- Crude Oil Surge: Oil prices soared after Iran fired 180 missiles at Israel; Brent crude rose from $71 to $75 a barrel. Concerns about exorbitant oil prices have been triggered by the possibility of Israel attacking Iranian oil fields in response. This will sharply increase India’s import tariffs, putting pressure on the country’s economy considering that 80% of its oil demand is met by imports . . . .
- Regulatory Changes by SEBI: Retail participation in the F&O business is likely to decline due to new regulations implemented by SEBI. Restrictions on weekly expiration and large deals can discourage smaller investors. In the short term, this is expected to reduce trading volumes.
- Foreign Institutional Investor Outflows: Tensions rose on October 1 when foreign portfolio investors (FPIs) completed the third day of equity sales worth ₹5,579.35 crore.
Predict Increased Volatility in the Market
Siddharth Khemka, head of research at Motilal Oswal Financial Services, issued a warning that markets may remain volatile in the near future if companies submit their past quarterly reports. Investors should prepare for volatility in private equity before uncertainty sets in.
With 2,881 stocks closing at the day’s lows and 1,107 rising, the BSE market was clearly biased to fall.
Given that today’s big market crash is due to a combination of factors including higher oil prices, geopolitical concerns, regulatory changes and the withdrawal of foreign investors, investors may have to be cautious because of volatility in the coming days.
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