NEW DELHI: Investors faced a massive loss of Rs 9.19 lakh crore on Tuesday as the stock market suffered a sharp sell-off, with BSE Sensex and Nifty50, experiencing significant declines due to a large outflow of foreign funds and weak global equities.
The market capitalisation of BSE-listed companies plunged by Rs 9,19,374.52 crore, dropping to Rs 4,44,45,649.22 crore ($5.29 trillion).
This drop extended the previous day’s downward trend, with the BSE Sensex plummeting 930.55 points or 1.15 per cent to settle at 80,220.72, while the Nifty50 declined 309 points or 1.25 per cent to 24,472.10.
1. Weak global cues
The substantial losses in both the Indian indices can be attributed to the combination of foreign investors withdrawing their investments from the Indian markets and the overall weakness in global stock markets.
Analysts noted that weak earnings growth and sluggish global markets weighed on investor sentiment, with rising US bond yields and policy actions in China contributing to FII outflows.
2. FII selling equities
Exchange data shows that on Monday, Foreign Institutional Investors (FIIs) sold equities worth Rs 2,261.83 crore, while Domestic Institutional Investors (DIIs) purchased equities amounting to Rs 3,225.91 crore.
“There has been no respite from FIIs selling in local equities in the current month so far, which has been creating uncertainty among domestic investors. Also, foreign investors are fleeing Indian equities to invest in relatively cheaper locations such as China, especially after the stimulus announcement by its government to boost its slowing economy,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, told news agency PTI.
3. US Fed cut rate led to weakness
Siddhartha Khemka, Head – Research, Wealth Management at Motilal Oswal Financial Services Ltd, said: “Rising US bond yield amid expectation of a modest rate cut by US Fed led to weakness in global markets and outflow of funds from emerging markets like India. Following its peers, Indian equities too witnessed a decline. Q2 earnings are also showing signs of moderation which dented the sentiments,”
4. Sectoral stocks too bore the burden
The BSE small cap index plunged 3.81 per cent, while the midcap index dropped 2.52 per cent.
All sectoral indices closed in the red, with BSE Industrials falling 3.51 per cent, followed by realty at 3.29 per cent, metal at 2.99 per cent, commodities at 2.80 per cent, power and utilities both down 2.64 per cent, telecommunications slipping 2.63 per cent, and consumer discretionary declining 2.54 per cent.
“Along with sectoral stocks, mid and smallcap stocks too bore the brunt as persistent buying had led to valuations in several stocks getting expensive and hence the breather,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, he added.
The biggest laggards in the Sensex pack included Mahindra & Mahindra, State Bank of India, Power Grid, Tata Steel, IndusInd Bank, Tata Motors, Larsen & Toubro, NTPC, Bajaj Finance, and Reliance. Meanwhile, ICICI Bank, Nestle, and Infosys emerged as the gainers.
Earlier in the intra-day trading session, Sensex tanked 1,001.74 points or 1.23 per cent to 80,149.53.