Market drops more than 1%, costing investors Rs 6 lakh crore
The domestic equity market plummeted on Wednesday, with the main indexes, the BSE Sensex and NSE Nifty50, down more than 1% apiece as a result of selling in bank and Reliance Industries Ltd. equities, as well as negative global signals.
The m-cap of all BSE listed businesses dropped to Rs 385.97 lakh crore in a single session as investors lost a total of Rs 6 lakh crore due to the stronger selling pressure in the mid-cap and small-cap packs.
The BSE Sensex closed Wednesday’s trading session at 72,304.88, down 790.34 points or 1.08%, while the Nifty50 down 247.20 points, or 1.11%, to close at 21,951.15. Wednesday saw a decrease in all sectoral indexes, with the car, oil and gas, electricity, and real estate sectors all seeing 2% declines.
The Nifty50 pack was most significantly impacted by index heavyweight Reliance Industries Ltd (RIL), which fell roughly 2% of its weight. ICICI Bank, Power Grid Corporation, and Maruti Suzuki India were the other leading laggards.
Indian markets were uneasy, reflecting the state of the world economy. Investors across the world are waiting for the important US economic statistics, such as personal consumption expenditure, because if the projection is positive, there’s a chance the Fed may postpone raising interest rates. The Asian market trend was further affected by unrest in China’s real estate industry, according to Vinod Nair, Head of Research at Geojit Financial Services.
Nair continued, stating that profit booking was a hindrance to Indian markets due to worries that the country’s GDP growth in Q3 would drop to 6.6% from Q2’s 7.6%. Pressure was applied to rate-sensitive industries, which led to FII sales and the overall market underperformance. On Wednesday, foreign institutional investors sold (net) stocks valued at Rs 1,879 crore.
Senior VP (Research) Prashanth Tapse of Mehta Equities predicted significant intraday volatility in the future due to investors placing selective bets in light of the already stretched values as the wait for interest rate decreases lengthens.
The indexes for midcap and small-cap stocks decreased by around 2% each. A major contributing factor to this widespread selling is a recommendation by mutual fund association AMFI to its member asset management firms, asking them to implement a smallcap and midcap investor protection strategy.
Fund houses have been urged by AMFI to take preventative steps to safeguard investors, such as rebalancing portfolios and limiting inflows.
