Share Market Crash: More than Rs 10 lakh crore lost in one stroke, Sensex fell 1700 points, know the reason for the fall?
Share Market Crash: Today, March 4, Indian stock markets witnessed a huge decline for the second consecutive day. The Sensex fell by more than 1,700 points in early trade. Nifty fell 530 points below 24,400.
This huge fall has spoiled the Holi happiness of investors. Within a few minutes, investors lost more than Rs 10 lakh crore. The total market cap of companies listed on BSE fell from Rs 456.90 lakh crore to Rs 446.45 lakh crore.
The ongoing war between Iran and Israel-USA, rise in crude oil prices and continuous selling by foreign investors have weakened the morale of investors. Barring IT, all major sectoral indices were trading with losses.
Midcap and smallcap indices also saw a decline of more than 2%. At around 9:25 am, BSE Sensex was trading 1,721.97 points or 2.15 per cent down at 78,516.88. Nifty was down 529.05 points or 2.13 per cent at 24,348.60.
Five big reasons for the decline in the stock market today
- Increasing conflict in the Middle East
Tension in the Middle East has increased rapidly in the last three days. Its effect is clearly visible on the stock market. On Saturday, America and Israel jointly took military action against Iran. Iran’s Supreme Leader, Ayatollah Ali Khamenei, was killed in these attacks.
In response, Iran launched missile and drone attacks on US and Israeli bases. Amidst this tension, the Strait of Hormuz has been closed. About 40 percent of India’s energy supply comes through this sea route, which has increased India’s concerns. Investors are now speculating where the Middle East war will end and which companies and their stocks could be affected.
- weak global signal
The effect of weakness in the stock markets around the world was also visible on the Indian stock market today. Investors are worried about the economic impact of increasing tensions between the US, Israel and Iran. The decline in Asian markets continued for the third consecutive day. Japan’s Topix index fell more than 4 percent, while Hong Kong’s Hang Seng fell more than 2 percent.
South Korea’s stock market also fell by 11 percent. US stock markets also closed with heavy losses last night. The Dow Jones fell 403 points, the S&P 500 fell 0.9 percent and the Nasdaq slipped 1 percent.
- crude oil shock
At present, oil prices have become the biggest concern for the stock market. Brent crude prices have reached around $81-$82 per barrel. This is due to the fear of interruption in oil supply through the Strait of Hormuz.
It is an important sea route for global oil supply. Analysts say that rising crude oil prices can become a big economic risk for India, because India imports about 85 percent of its oil needs from abroad.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that if this fight continues for a long time, the biggest concern for the market will be its economic impact. According to him, uncertainty in the market has increased due to increasing fighting and increase in crude oil prices.
He warned that higher oil prices could widen India’s trade deficit, put pressure on the rupee and hit corporate earnings. Apart from this, rising inflation can affect economic growth.
- Selling by foreign investors
Continuous selling by Foreign Institutional Investors (FIIs) is also a matter of concern for the stock market. Foreign investors sold shares worth a net Rs 3,295.64 crore in trading on Monday, March 2. Foreign investors have remained net sellers continuously for the last eight months, due to which the market sentiment has weakened.
- Sharp rise in India VIX
India VIX, which shows fluctuations in the stock market. Today it increased by almost 14 percent to reach 19.51, which shows the increasing uncertainty of investors. Traders have become cautious about geopolitical tensions and rising oil prices, which has increased fear and volatility in the market.
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