₹9L crore wiped off: Why Indian stock market crashed today
The Indian stock market witnessed a major crash today with the Sensex and Nifty 50 indices each plummeting over 1%. The decline comes after a similar trend was seen on Monday. The mid and small-cap sectors bore the brunt even more as the BSE Midcap and Smallcap indices crashed up to 4%. This sudden drop has sparked concerns and questions about the factors contributing to the market slump.
Market capitalization dips by ₹9 lakh crore
The Nifty 50 ended the day with a loss of 1.24%, closing at 24,472, while the Sensex ended the day 1.14% lower at 80,220. The overall market capitalization of the BSE-listed firms dropped to nearly ₹444.8 lakh crore from nearly ₹453.7 lakh crore in the previous session, making investors poorer by about ₹9 lakh crore in a single day. Nifty PSU Bank (down 4.18%), Realty (down 3.38%) and Metal (down 3%) sectoral indices crashed the most today.
Factors influencing the market downturn
Experts blame the decline on increased geopolitical tensions, uncertainty over US election 2024, and continued selling by foreign portfolio investors (FPIs). The less-than-stellar September quarter earnings and the high valuation of the Indian stock market are also weighing on the market. The Q2 FY25 earnings season has so far displayed generally subdued underlying trends across sectors, which has negatively impacted investor sentiment. Most stocks are trading at high valuations that need strong performance to sustain these levels.
FPIs withdraw record ₹82,479 crore from Indian equities
According to equity research platform Trendlyne, Nifty 50's current PE ratio is slightly above 23, above its two-year average PE of 22.2. This could have triggered profit booking. So far in October, FPIs have pulled out a record ₹82,479 crore from Indian equities marking the highest monthly outflow on record. The biggest reason behind this foreign capital outflow is the 'sell India, buy China' strategy gaining momentum after Beijing announced several stimulus measures to boost its economic growth.
