Market crash: Investors become poorer by ₹13 lakh crore; Sensex tanks 2.27% in two days

From the 30-share Sensex pack, Mahindra & Mahindra, Tata Steel, Adani Ports, JSW Steel, IndusInd Bank, Reliance Industries, HDFC Bank and Kotak Mahindra Bank were the biggest laggards. 
| Photo Credit: Reuters

Equity investors suffered an erosion of ₹13 lakh crore in market valuation in two days of crash in the BSE benchmark Sensex which lost more than 2% during this period.

“Retail inflation soaring to a 14-month high of 6.21% in October, unabated foreign fund outflows and muted quarterly earnings are the major reasons behind the heavy correction in the markets,” traders said.

The BSE benchmark Sensex tanked 1,805.2 points or 2.27% in two days. On Wednesday (November 13, 2024), it slumped 984.23 points or 1.25% to settle at 77,690.95.

The market capitalisation of BSE-listed companies eroded by ₹13,07,898.47 crore to ₹4,29,46,189.52 crore ($5.09 trillion) in two days. Retail inflation breached the Reserve Bank’s upper tolerance level, soaring to a 14-month high of 6.21% in October mainly on account of rising food prices.

“With inflation once again rising sharply and breaching above the RBI’s comfort level, receding hopes of any major rate cuts in the near future by the central bank put the markets into a tizzy.”

“Also, relentless FII selling in local equities, along with rising U.S. bond yields and dismal corporate earnings show has prompted overseas investors to park their funds in relatively cheaper markets like China,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Limited, said.

From the 30-share Sensex pack, Tata Steel, Mahindra & Mahindra, Adani Ports, State Bank of India, JSW Steel, HDFC Bank, IndusInd Bank, Kotak Mahindra Bank, Reliance Industries and Bajaj Finserv were the biggest laggards. NTPC, Tata Motors and Infosys were the gainers.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,024.31 crore on Tuesday (November 12, 2024), according to exchange data. The BSE smallcap gauge tanked 3.08% and midcap slumped 2.56%.

All sectoral indices ended lower. Realty tumbled 3.23%, industrials (2.95%), capital goods (2.72%), services (2.54%), metal (2.54%) and commodities (2.45%). A total of 3,299 stocks declined while 670 advanced and 98 remained unchanged on the BSE.

“Nifty has experienced its first significant correction in terms of both time and price since March 2023. This sell-off was sparked by China’s new stimulus package, which has diverted FII flows from India to China. Additionally, weaker-than-expected Q2 earnings from Indian companies, particularly in the consumption sector, have further intensified FII selling, leading to record outflows from Indian equities over the past month and a half.

“Adding to these pressures are rising U.S. bond yields and a strengthening dollar index, both of which pose challenges for emerging markets like India,” Santosh Meena, Head of Research at Swastika Investmart Limited, said.