New Delhi. Investors' wealth worth Rs 9 lakh crore was lost due to the tsunami that hit the Indian Stock Market on Tuesday. Smallcap and midcap indices have fallen by up to 4 percent. Let us tell you what is the reason for this tsunami in the Indian market?
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In the Indian Stock Market today, Sensex closed by 930 points and Nifty by 303 points. Many stocks saw a decline of up to 5%. In the Sensex top 30, only ICICI Bank, Nestle India and Infosys showed marginal growth. Shares of remaining 27 companies closed in the red.
Weak quarterly results of companies
The valuations of many companies in the Indian market are quite high, but the results of many companies are not justifying their valuations. Bajaj Auto, Kotak Mahindra Bank and RBL Bank are examples of this. There was a huge decline in the shares of all these after the quarterly results. Investors also did not seem happy with the quarterly results of Reliance Industries.
Selling by foreign investors
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Foreign Portfolio Investors (FPIs) are continuously selling in the Indian Stock Market. So far in October, FPIs have pulled out a record Rs 82,479 crore from Indian equities. Earlier in March 2020, during the Covid-19 pandemic, FPIs had sold Indian shares worth Rs 65,816 crore. Although this loss is being compensated by Domestic Institutional Investors (DII) purchases, it still seems insufficient.
High valuation of Indian market
The valuation of the Indian Stock Market is also quite high. This is the reason why foreign investors are turning to markets like China and Hong Kong, which are relatively cheap. The Chinese government has also announced a financial incentive package. Besides, the central bank there has also cut the policy interest rates. Due to this, China's stock market is becoming even more attractive for investment. At the same time, the Indian market seems to be shaky.
Very weak signals were also received from global markets
Very weak signals were also received from global markets. Talking about the American market, on Monday only out of the three major indices closed in the green. At the same time, today Asian markets like Japan and South Korea also saw a decline of more than 1 percent. Due to this, the sentiment of the Indian Stock Market also weakened. However, the stock markets of China and Hong Kong, with which India has rivalries, closed in the green.
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