The Bombay Stock Exchange (BSE) witnessed a historic downturn on Wednesday, with the benchmark Sensex plummeting by a staggering 1,628 points, resulting in a colossal loss of ₹4.59 lakh crore from investors’ wealth, as reported by PTI.
This abrupt and substantial decline marked the most significant single-day plunge for both the Sensex and the NSE index Nifty in the past 19 months. The Sensex closed the day at 71,500.76, down by 1,628 points, while the Nifty experienced a nosedive of 460.35 points, or 2.09%, settling at 21,571.95. The National Stock Exchange (NSE) saw its shares suffering the most substantial single-day loss since June 13, 2022.
The collective market capitalization of BSE-listed firms bore the brunt of this market upheaval, witnessing an erosion of ₹4,59,327.64 crore and settling at ₹3,70,35,933.18 crore. Over the course of just two days of market decline, investors’ wealth dwindled by an alarming ₹5,73,576.83 crore.
attributed this significant downturn to the hawkish comments made by the US Federal Reserve. These comments triggered a spike in yields on the US 10-year bonds and the US dollar index, which sent shockwaves through European and Asian markets, including India. Tapse also highlighted that India’s stock market valuations are currently perceived as expensive compared to other global stock indices. He expressed the view that investors are likely to exercise caution and wait for more positive cues before considering further equity exposure.
Tapse elaborated on the challenges in the near-term, including the persistent conflict in the Middle East and concerns about a delay in the US Federal Reserve rate cut. These factors, he suggested, could continue to dampen investor sentiment in the foreseeable future.
Notably, HDFC Bank, a heavyweight in the Sensex, witnessed a significant hit, with its shares plummeting by over eight percent. This decline came a day after the bank reported a net profit of ₹16,372 crore in its Q3 results. Shed light on the factors contributing to the broader market turmoil. He pointed to a weak global environment, a selloff in HDFC Bank, and a stagnant growth revelation in the bank’s Q3 results as catalysts for the downturn. Khemka also emphasized the impact of hawkish Federal Reserve commentary, escalating tensions in the Middle East, and a spike in bond yields on investor sentiment.
As the market grapples with these challenges, the banking sector bore the brunt of the downturn, significantly impacted by HDFC Bank’s lackluster Q3 performance. The specter of hawkish sentiments from the US Federal Reserve and escalating geopolitical tensions further intensified the headwinds faced by the banking sector.
While the market reels from this unprecedented plunge, analysts and investors alike are closely monitoring global economic indicators and awaiting positive signals that may instill confidence in the markets. The pervasive uncertainty underscores the delicate balance between global economic dynamics and local factors influencing India’s financial landscape. As investors navigate these challenging times, the resilience of the market will likely be tested, and strategic decision-making will be pivotal in weathering the storm and restoring stability to the financial markets.