Investors’ Wealth Plummets by Rs 9.51 Lakh Crore Amid Equity Market Crash
New Delhi, August 5, 2024 — Investor wealth saw a significant decline of Rs 9.51 lakh crore on Monday morning, as the Indian equity markets experienced a severe downturn. The benchmark BSE Sensex plummeted by over 2,400 points, reflecting a broader global market sell-off.
In early trading, the 30-share BSE Sensex plunged 2,401.49 points to 78,580.46. Consequently, the market capitalisation of BSE-listed companies fell by Rs 9,51,771.37 crore, bringing the total to Rs 4,47,65,174.76 crore (approximately USD 5.35 trillion).
Santosh Meena, Head of Research at Swastika Investmart Ltd, attributed the global market turmoil to several factors. “The initial catalyst was the fear of a reverse Yen carry trade following an interest rate hike in Japan. This was further exacerbated by concerns over a potential recession in the USA, triggered by dismal job data that has rattled market sentiment,” he explained.
Indian equity markets are now showing signs of the first significant correction following a prolonged bull run, according to Meena.
Asian markets echoed the global sentiment, with Seoul, Tokyo, Shanghai, and Hong Kong all trading sharply lower. Notably, Japan’s Nikkei 225 index dropped as much as 8.1% early Monday, extending the sell-off that began last week as anxiety over the US economic outlook intensified.
US markets had also closed significantly lower on Friday. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The global stock market rally has been driven largely by expectations of a soft landing for the US economy. However, these expectations are now in jeopardy due to a decline in US job creation for July and a rise in the US unemployment rate to 4.3%. Additionally, geopolitical tensions in the Middle East are contributing to the market’s instability.”
Among the Sensex constituents, Tata Motors, Maruti, Tata Steel, Infosys, Tech Mahindra, and JSW Steel were the major laggards. In contrast, Hindustan Unilever, Sun Pharma, Nestle, and Asian Paints showed positive movement.
Foreign Institutional Investors (FIIs) also contributed to the market’s decline by offloading equities worth Rs 3,310 crore on Friday, according to exchange data.
As the markets grapple with these challenges, investors are advised to stay informed and consider their positions carefully amidst the current volatility.
