Investors suffered a massive loss of Rs 3.46 lakh crore on Wednesday as equity markets experienced a sharp decline due to weak global trends and foreign fund outflows. The BSE Sensex dropped by 676.53 points or 1.02 per cent to close at 65,782.78, and during the day, it plummeted 1,027.63 points or 1.54 per cent to 65,431.68. Consequently, the market capitalization of BSE-listed firms saw a significant erosion of Rs 3,46,947.54 crore, settling at Rs 3,03,33,258.69 crore.
The downward trend was largely influenced by the downgrade of the US government’s credit rating by Fitch Ratings, citing concerns about rising debt and governance standards. However, experts believe that the impact on the Indian market should be short-lived, with focus eventually returning to earnings, infrastructure investments, and fund flows.
Vinod Nair, Head of Research at Geojit Financial Services, pointed out that the Indian market experienced a broad sectoral decline due to weak global market trends, coupled with negative news about the US rating downgrade and weak factory activity data from Eurozone and China. Moreover, foreign investors’ selling spree, triggered by a rise in US bond yields, further affected the domestic market sentiment.
Major laggards among the Sensex companies included Tata Steel, Tata Motors, Bajaj Finserv, NTPC, State Bank of India, JSW Steel, Larsen & Toubro, and Bharti Airtel, while Nestle, Hindustan Unilever, Asian Paints, Tech Mahindra, and UltraTech Cement were among the gainers.
The broader market also witnessed declines, with the BSE midcap gauge falling by 1.39 per cent and the smallcap index declining by 1.18 per cent. All sectors ended lower, with metals, utilities, power, and telecommunication being the worst hit.
The sell-off was not limited to India, as Asian and European markets also ended lower. The US markets also closed mostly negative on the preceding day.
Foreign Institutional Investors (FIIs) were seen offloading equities worth Rs 92.85 crore on Tuesday, contributing to the downward trend in the Indian market.
