Sensex, Nifty crash wipes out Rs 6 lakh crore investor wealth: Why are markets suddenly falling?

Rs 6 lakh crore investor wealth lost: Why are markets falling?

Stock market crash India, Indian stock market falls, Sensex crash, Nifty fall, Stock market news

The BSE Sensex and Nifty50 both plunged today.

The BSE Sensex dropped nearly 800 points to close around 72,300, while the Nifty50 dipped under the 22,000 level.

The Nifty Small Cap 100 fell 1.87 per cent, while the Nifty Midcap 100 indexes was decreased 1.94 per cent.

Nearly Rs 6 lakh crore of investor wealth was wiped out.

But what happened? And why are markets suddenly falling?

Let’s take a closer look:

What happened?

The BSE Sensex lost 1.08 per cent to close at 72,304, while the Nifty lost 1.11 per cent and finished at 21,951.

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According to Mint, this came after PSU bank, realty, auto, oil, and gas stocks witnessed heavy sell-offs.

Heavyweights such as Reliance Industries Ltd, ICICI Bank, HDFC Bank, PowerGrid, M&M, Maruti, L&T, Kotak Mahindra Bank, Asian Paints, IndusInd Bank and SBI all lost heavily.

However, Hindustan Unilever, Infosys and Tata Consultancy Services and Bharti defied the day’s trends to emerge winners.

The Economic Times reported that the market capitalisation of all BSE-listed stocks fell to ₹386 lakh crore.

All the NSE’s 15 sector indexes ended down.

Nifty PSU Bank, Nifty Oil & Gas, Nifty Media, Nifty Realty and Nifty Auto respectively lost 2.30 per cent, 2.08 per cent, 3.46 per cent, 2.11 per cent and 2 per cent.

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Just four stocks on the Nifty50 ended in the positive while the rest closed in the negative.

As many as 4 stocks settled in the green in the Nifty 50 index while the rest 46 ended in red.

India VIX, known as the fear index, increased 4.02 per cent to close 16.36.

Why did markets fall?

Experts say a variety of reasons are to blame.

These including profit-booking, the F&O expiry date being tomorrow, Foreign Institutional Investors (FIIs) continuing to sell, and key economic data set to be released.

Prashanth Tapse, research analyst and senior vice oresident of Research at Mehta Equities, told Mint, “Massive profit booking to be blamed. It was sea of red at Dalal Street as all sectoral indices had nothing to offer but blood, toil, tears and sweat."

Business Today noted that investors are looking to the core personal consumption expenditures (PCE) price index, which is slated to be released today in the US.

This is the US Federal Reserve’s preferred way of charting inflation.

The Times of India reported that the probability of a rate cut dropped to 59 per cent.

Some investors are also growing wary about valuations as the market cap-to-GDP ratio crossed 120% per cent.

_News1_8 reported that the eye-popping rally of small and midcap funds has come to the notice of markets regulator SEBI.

SEBI has ordered mutual funds to be more transparent about the perils and hazards they face when it comes to liquidity.

Reuters reported that mutual funds are being asked to disclose how long it might take to accommodate large redemptions, what impact large outflows could have on the value of the portfolio and how much cash and liquid assets the fund holds to meet outflows.

Pravesh Gour, senior technical analyst at Swastika Investmart Ltd told News18, “The movement of the stock market is complex and vulnerable to several influences. Corrections in the market are common. Investors with long-term horizons may see this as a buying opportunity."

He added that 90 stocks are trading lower after the Nifty Midcap Index lost over 1,000 points.

“There can be brief selling pressure as a result of investors taking profits following large gains. The market may have declined as a result of foreign institutional investors (FIIs) selling off large quantities of Indian stocks. The market also became nervous before so many economic indicators such as GDP data, PCE price index data, and manufacturing PMI numbers in the US. Another reason may be that the US government will partially shut down on March 1st without a spending bill.”

“For February monthly series, 22,200 call has significant open interest, followed by 22,300 strikes. On the put side, 22,200 has significant open interest, followed by 22,100 strike implying the zone of 22,140-22,120 will act as immediate support for the index. While, on the upside the level of 22,270 will act as immediate resistance for the index,” SBI Securities said on F&O’s.

But what happens next?

Dr VK Vijayakumar of Geojit Financial Services told News18, “Market is likely to be in a range-bound zone in the near term. FIIs have sharply reduced their selling this month and have turned buyers to the tune of Rs 872 crore in the cash market, so far in February, despite the high US bond yields. This indicates that FIIs are unlikely to press big selling pulling the market sharply down.”

“Nifty 50 underwent a sharp correction during the day amid a strong sell-off. The index dropped below the 22,000 mark, indicating a growing weakness. Nevertheless, it managed to close just above the 21EMA on the daily timeframe. Observing the daily chart, the index has been navigating within a rising channel. A decline below 21,950 could potentially trigger a correction towards 21,800 in the near term. Conversely, a sustained trade above 21,950 might spur a recovery in the index towards 22,100,” said Rupak De, senior technical analyst, LKP Securities, told Mint.

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