Sensex Plunges 1,236 Points Amid Global Economic Headwinds
Mumbai's Dalal Street experienced a severe downturn on Thursday, with the benchmark Sensex plummeting by 1,236 points, or 1.5%, to close at 82,498 points. This significant decline was triggered by a combination of factors, including uncertainty surrounding the US Federal Reserve's future interest rate cuts and escalating geopolitical tensions, particularly between the United States and Iran.
Market Sell-Off Wipes Out Nearly Rs 7 Lakh Crore
The trading session began on a relatively positive note, with the Sensex gaining approximately 250 points early in the day. However, as the session progressed, the index reversed course dramatically, sliding to close near its daily low of 82,264 points. All 30 constituents of the Sensex ended the day in negative territory, reflecting a broad-based sell-off that resulted in investors losing nearly Rs 7 lakh crore in wealth.
On the National Stock Exchange (NSE), the broader Nifty index mirrored this downward trend, falling by 365 points, or 1.4%, to settle at 25,454 points. According to official data from the Bombay Stock Exchange (BSE), the market capitalization now stands at Rs 465.2 lakh crore, down significantly from previous levels.
Expert Analysis: Geopolitical and Economic Factors at Play
Vinod Nair, Head of Research at Geojit Investments, provided insights into the market's sharp decline. He attributed the sell-off primarily to rising geopolitical tensions between the US and Iran, which led to a widespread liquidation of positions. "Brent crude surged to its year-to-date high, exacerbating inflationary concerns and triggering heightened market volatility due to fears of a bottleneck in the Strait of Hormuz," Nair explained.
He further noted that uncertainty regarding the US Fed's rate-cut trajectory, coupled with the continued weakness of the Indian rupee, significantly impacted the domestic market. This combination of global and local factors created a perfect storm for investors, prompting a rush to exit positions.
Key Contributors to the Decline and Sectoral Performance
Among the Sensex stocks, Reliance Industries, HDFC Bank, and ICICI Bank were the primary contributors to the index's four-digit loss for the day. These heavyweight stocks dragged the benchmark lower as selling pressure intensified across the board.
Sectoral data from BSE revealed that real estate, power, and auto sectors were hit the hardest during the sell-off, while healthcare and hospital stocks remained relatively resilient, showing the least impact. At the close of trading, a staggering 3,011 stocks on BSE ended with losses, compared to only 1,209 that managed to close with gains.
Institutional Trading Patterns and Market Sentiment
Interestingly, foreign institutional investors (FIIs) recorded net selling of Rs 880 crore, a figure that was comparatively muted given the scale of the market decline. Domestic institutional investors (DIIs) also turned net sellers, with net selling amounting to Rs 596 crore. This deviation from recent trends is notable, as institutional trading data in recent months has typically shown domestic funds stepping in as buyers on days when foreign funds are selling.
The day's events underscore the vulnerability of Indian markets to global economic cues and geopolitical developments. As investors grapple with uncertainty on multiple fronts, market volatility is expected to remain elevated in the near term.
