Today’s decline is the third largest of 2024, with the 30-stock index hitting a low of 82,449.01. The market capitalization of BSE-listed companies eroded by nearly Rs 10 lakh crore.
The largest fall, a staggering 4,390 points, occurred on June 4, when the General Election results were announced, diverging significantly from what the exit polls had predicted. On August 5, the Sensex plunged by 2,223 points, recording its second-biggest decline.
On January 17, the Sensex had fallen by 1,628 points, marking the fourth biggest drop this year. Other instances where it declined by over 1,000 points were on January 23, May 9, September 6, and September 30.
This analysis considers the correction in terms of points, not the percentage of the fall.
Among the Sensex constituents, only two stocks were trading in the green: JSW Steel and Tata Steel, up by 1.62% and 0.24%, respectively.
Indian stocks declined due to rising concerns over escalating hostilities between Iran and Israel. Reports indicate that the Israeli military has confirmed the deaths of eight soldiers, including a team commander, during ground operations in southern Lebanon. This escalation followed Iranian missile attacks on Tel Aviv, with Israel’s military chief warning of an imminent response.
The war triggered oil prices, which shot up on supply concerns from major producers. Brent crude briefly surpassed $75 per barrel, while West Texas Intermediate topped $72, with both benchmarks rising nearly 5% over the past three days.
A rise in oil prices is a negative for importers of the commodity like India, as crude contributes significantly to the country’s import bill.
“The situation will change if Israel attacks any oil installations in Iran which will trigger a huge spike in crude. If it happens, it can turn out to be more damaging for oil importers like India. Therefore, investors should watch the emerging situation very closely,” said Dr V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services.
Moreover, the China factor also played on investors’ minds as they are worried about the resurgence of Chinese stocks, which have underperformed in recent years. Following the announcement of economic stimulus measures by the Chinese government last week, analysts predict sustained growth in Chinese stocks, prompting a potential outflow of funds from India.
The SSE Composite index rose 8% on Tuesday and has gained over 15% in the past week. As a result, foreign institutional investors have withdrawn Rs 15,370 crore from Indian equities in the last two trading sessions.
Dr Ravi Singh, Senior Vice President, Retail Research at Religare Broking also attributed the sell-off to foreign institutional investors (FIIs) who are selling in the domestic markets. On Tuesday, they sold equities worth Rs 5,579 crore.
He also pointed out Jefferies’ Chris Wood reducing his weightage on India by 1% and increasing his weightage on China by 2%.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)