Indian equity markets witnessed a sharp sell-off on Monday, with the Sensex nosediving by more than 1,150 points. At the time of filing, it was trading at 84,400.69.
At the time of filing, the Nifty also cracked by 333.05 points, trading at 25,845.90. The sharp decline resulted in the market capitalisation of all BSE-listed companies fell by more than Rs 2.70 lakh crore, bringing it down to around Rs 475 lakh crore.
The key contributors to the fall were heavyweights like Reliance Industries, ICICI Bank, HDFC Bank, and Axis Bank, collectively dragging the Sensex down by more than 1,000 points. The heavyweight in the Sensex index Reliance Industries fell by over 2.5%, trading at Rs 2,970.15.
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The market crash impacted several sectors, with Nifty Bank, Auto, Financial Services, IT, Media, Realty, Healthcare, and Oil & Gas sectors dropping by as much as 1.6%. Meanwhile, the India VIX, a measure of market volatility, surged by 6.3% to 12.7, indicating heightened investor anxiety.
Key Factors Behind the Crash
1-FIIs Shift Focus to China
Foreign Institutional Investors (FIIs) have been drawn to the Chinese markets following a series of stimulus measures introduced by the Chinese government. The CSI300 index rose by 3%, while the Shanghai Composite surged by 4.4%, extending last week's 13% rally.
In addition, China's central bank announced plans to cut mortgage rates for existing home loans, further boosting investor confidence in the region.
2-Geopolitical Tensions
Escalating geopolitical tensions in the Middle East, particularly Israeli strikes in Lebanon, have added uncertainty to global markets.
While oil prices have remained somewhat stable due to the potential increase in supply, rising crude prices have impacted sentiment in India, which relies heavily on oil imports.
3-FIIs Turn Net Sellers
FIIs sold Indian equities worth Rs 1,209 crore on September 27, contributing to the market's fall. However, total inflows for September remain strong, exceeding Rs 57,000 crore.
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4-Profit BookingBefore this downturn, the Nifty and Sensex had enjoyed a robust six-session rally. With no major triggers to sustain momentum, investors opted to book profits, leading to today’s sell-off.