Stock market collapsed due to these 2 reasons, investors lost Rs 8 lakh crore in 3 days; Expert’s warning

Why Share Market Crash: The decline in the domestic stock market continued for the third consecutive day. On Wednesday also the market closed in the red. Investors’ wealth has declined by about Rs 8 lakh crore in the last three days. The biggest decline is seen in smallcap and midcap stocks, and retail investors have also suffered the most losses, because Indian retail investors invest the most in smallcap and midcap stocks.

In fact, at the end of trading on Wednesday, the Sensex fell 275.01 points or 0.32% and closed at 84,391.27. Whereas Nifty fell by 81.65 points or 0.32 percent and closed at the level of 25,758. Shares of Indigo, Eternal and HDFC Bank saw a decline of up to 3 percent.

1.09 lakh investors lost money on Wednesday

The total market cap of companies listed on BSE came down to Rs 463.82 lakh crore, which was Rs 464.91 lakh crore on its previous trading day i.e. Tuesday. In this way, the market cap of companies listed in BSE has decreased by about Rs 1.09 lakh crore on Wednesday. Nifty remains between 25500 to 26000 points, but there is an outcry in midcap and smallcap stocks. Short declines dominate in largecap companies. Therefore, market analysts are now suggesting that investors review their portfolios again, and avoid investing too much in midcaps and smallcaps for now.

The real reason for the decline in the stock market

If we look at the reason for the decline, then according to experts the biggest reason for the decline is foreign investors There has been continuous selling of (FIIs). So far in December alone, foreign investors have sold more than Rs 15 thousand crore. On Tuesday alone, foreign investors sold shares worth Rs 3,760 crore. Wednesday is the 10th consecutive day when foreign investors have withdrawn money from the stock market. The second reason for the decline is the atmosphere of fear in the market regarding the policies of the Federal Reserve (Fed). Investors are avoiding investing money in the market.

The market is assuming that the Federal Reserve Bank can cut interest rates by 0.25 percent. However, investors are more confused about what the Federal Reserve’s policy stance will be in 2026. Apart from this, there is also confusion regarding the successor of Chairman Jerome Powell after his term ends in May.

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Market expert’s warning for investors

Meanwhile, senior market expert Deven Choksey has warned that indian stock market The earthquake in mid and small cap stocks is troubling investors. At present, investors need to be cautious about these segments, because due to high valuations and weak fundamentals, this decline can be prolonged. Choksi explains that in recent years, investors had a special inclination towards some companies. In which the price-to-earnings (PE) ratio of many stocks had become very high. Such over-valuation made a correction inevitable.