By PC Bureau
The Indian stock market faced a steep decline on Wednesday, as the BSE Sensex closed at its lowest in over four months. Over the past two days, the BSE Sensex has fallen by 1,805.2 points, marking a 2.27% drop. A market meltdown has erased Rs 13 lakh crore from Indian investors’ wealth in the  two days. The BSE’s market capitalization has plummeted to Rs 4,29,46,189.52 crore ($5.09 trillion).
Both the Sensex and Nifty saw losses exceeding 1% due to extensive selling in banking, auto, and capital goods stocks. The selling was triggered by October’s retail inflation hitting a 14-month peak of 6.21% and sustained foreign fund withdrawals.
The BSE Sensex fell by 984.23 points (1.25%) to close at 77,690.95. During the day, it declined by as much as 1,141.88 points (1.45%) to 77,533.30. The NSE Nifty, continuing its downtrend for the fifth consecutive session, dropped by 324.40 points (1.36%) to 23,559.05.
Investor Losses Reach Rs 13 Lakh Crore
The recent downturn in the BSE benchmark has significantly impacted equity investors, resulting in a market value loss of Rs 13 lakh crore over two trading days. The combined market cap of BSE-listed firms decreased by Rs 13,07,898.47 crore, totaling Rs 4,29,46,189.52 crore ($5.09 trillion). Among the top losers in the Sensex 30 pack were Mahindra & Mahindra, Tata Steel, Adani Ports, JSW Steel, IndusInd Bank, Reliance Industries, and Kotak Mahindra Bank. However, Tata Motors, NTPC, Hindustan Unilever, Asian Paints, and Infosys recorded gains.
The ongoing selloff by Foreign Institutional Investors (FIIs) has been driven by factors like weak corporate earnings, a domestic inflation surge, and heightened US bond yields. Vinod Nair, Head of Research at Geojit Financial Services, highlighted that October’s high inflation dashed hopes for a near-term RBI rate cut. Santosh Meena of Swastika Investmart Ltd noted that the selloff was also intensified by China’s new stimulus package, diverting FII flows from India. FIIs sold equities worth Rs 3,024.31 crore on Tuesday, following Rs 2,306.88 crore on Monday, leading to cumulative outflows of Rs 23,911 crore in November.
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Retail inflation exceeded the RBI’s upper threshold, reaching 6.21% in October, mainly due to rising food costs. According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, the inflation spike has lowered the possibility of any significant rate cuts by the RBI, which has added further pressure on the markets.
The downturn has affected all sectoral indices, with the BSE small-cap index dropping 3.08% and the mid-cap index down by 2.56%. The worst-hit sectors included realty (down 3.23%), industrials (2.95%), capital goods (2.72%), services (2.54%), metals (2.54%), and commodities (2.45%). In total, 3,299 stocks declined, while only 670 advanced and 98 remained unchanged.
The Indian rupee saw minimal movement, settling at 84.38 against the US dollar. The currency has been under pressure from foreign fund outflows and weaker performance in domestic markets. Dealers noted that while the dollar’s strength weighed on sentiment, the RBI’s market interventions provided some support.
Mixed results in Asian markets, with Seoul, Tokyo, and Hong Kong declining while Shanghai advanced, contributed to the volatile market sentiment. European markets traded positively, whereas US markets closed lower on Tuesday. Additionally, Brent crude oil prices rose by 0.93% to $72.56 per barrel, adding another dimension to the uncertain market landscape.
