Equity investors have witnessed a staggering erosion of Rs 18.43 lakh crore in wealth over five consecutive days of a market downturn. The benchmark BSE Sensex plunged 4,091 points or 4.98 per cent during this period, amid heavy foreign fund outflows and weak global cues.
The BSE benchmark Sensex fell sharply by 1,176.46 points or 1.49 per cent on Friday, closing at 78,041.59.
Earlier in the session, it had plummeted by 1,343.46 points to touch an intraday low of 77,874.59. Similarly, the NSE Nifty declined 364.20 points or 1.52 per cent, settling at 23,587.50 on Friday.
The combined market capitalisation of companies listed on the Bombay Stock Exchange (BSE) shrank by Rs 18,43,121.27 crore, dropping to Rs 4,40,99,217.32 crore (USD 5.18 trillion) by the end of the trading week.
“Nervousness continued to grip investors, with stocks across the board plunging as the dollar’s strength against the rupee prompted foreign investors to flee local equities in favour of safe-haven dollar assets,” said Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd.
The selloff was widespread, with key sectors including realty, power, IT, and financial services bearing the brunt. The BSE Realty index slumped 4.07 per cent, while the Power index declined 3.55 per cent. Capital Goods, Industrials, and IT indices fell by 3.02 per cent, 2.67 per cent, and 2.51 per cent, respectively.
Among Sensex constituents, Tech Mahindra, Mahindra & Mahindra, IndusInd Bank, Axis Bank, Tata Motors, State Bank of India, Tata Consultancy Services, Larsen & Toubro, UltraTech Cement, and Reliance Industries were the biggest losers. On the flip side, Nestle and Titan managed to post gains.
Market sentiment took a hit globally after the US Federal Reserve signalled a slower pace of rate cuts than previously anticipated, exacerbating risk aversion among investors. “This bearish outlook is particularly impacting the domestic market, which is already contending with high valuations and low earnings growth,” said Vinod Nair, Head of Research at Geojit Financial Services.
Foreign Institutional Investors (FIIs) continued their selling spree, offloading equities worth Rs 4,224.92 crore on Thursday alone, according to exchange data. Meanwhile, midcap and smallcap indices on the BSE also fell sharply, by 2.43 per cent and 2.11 per cent, respectively.
Global markets falter
Asian markets, including Seoul, Tokyo, Shanghai, and Hong Kong, ended in the red.
European equity markets were also trading lower, and Wall Street closed on a mixed note in the previous session. The global oil benchmark Brent crude fell 0.96 per cent to USD 72.18 per barrel, adding to the pressure.
“Investors are grappling with a mix of global and domestic challenges, including the Federal Reserve’s hawkish stance, persistent foreign fund outflows, and high market valuations,” said Ajit Mishra, Senior Vice President (Research) at Religare Broking Ltd. “The corrective phase is likely to persist, with significant downside risks remaining in mid and small-cap stocks”, Mishra added.
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