Investors Lose ₹8.58 Lakh Crore in Stock Market Meltdown
Investor wealth fell by ₹8.58 lakh crore on Monday as the sharp rise in crude oil prices triggered heavy selling on Dalal Street and the total market capitalization of BSE fell to around ₹441.10 lakh crore.
The sharp rise in crude oil futures above $100 per barrel triggered a sell-off that caused panic in the market as Brent crude oil futures skyrocketed to a four-year high of $119.5 per barrel. The Sensex index fell 2,494.35 points or 3.16 per cent to 76,424.55 around 9.25 am after a large gap opened up on the possible negative impact of higher oil prices on the economy.
Nifty-50 fell 752.65 points during the day to 23,697.8. Later, there was a partial recovery of more than one percent as Sensex closed at 77,566.16, down 1,352.74 points or 1.71 percent, and Nifty closed at 24,028.05, down 422.4 points.
For India, the sharp move in crude oil prices has raised concerns about high inflation, widening current account deficit and potential pressure on economic growth, all of which have dampened market sentiment, analysts said.
Foreign portfolio investors were heavy sellers at ₹6,345.57 crore, while domestic institutions were net buyers at ₹9,013.8 crore.
Among the sectors affected by the sharp rise in crude oil prices were oil and gas stocks, led by oil marketing companies, as well as aviation, automotive and paint stocks. Stocks of consumer discretionary and capital goods also fell heavily.
Volatility index NSE’s India VIX index closed at 23.36, up 17.51 percent, after hitting a 52-week high of 24.49 during the day; This indicates that there will be a very volatile market in the coming days.
As government bond yields rose, bank stocks also fell sharply. BSE and NSE PSU bank indices fell by 3.92 percent and 3.05 percent respectively. The 10-year government bond yield rose to 6.76 percent during the day.
Sectors such as healthcare and IT suffered less from the market decline.
“Oil is unlikely to maintain its level of around $115 per barrel for long and once prices stabilise, markets will get back on their feet,” said Satish Kumar, Managing Director and Head, InCred Research Services.
“Fluctuations in crude oil prices are expected to put pressure on sectors where oil is a significant input cost,” said Siddhartha Khemka, Research Manager, Motilal Oswal Financial Services.
