Lost on the Street: More than Rs 9 lakh crore!

It was a complete bloodbath at Dalal Street as bears further tightened their grip, taking away more than Rs 9 lakh crore of wealth from investors on Monday.

The weakness in global markets after the lending rate cut by China for the first time since April 2020 weighed on the stock market.

Rising Omicron worries are posing a risk for global growth. COVID-related restrictions in several European nations, unabated selling by foreign institutional investors (FIIs), and policy-tightening and liquidity-reduction measures by major central banks also dented market sentiment.

Biggest single-day fall

The benchmark indices witnessed the biggest single-day fall since April 2021. At 13:02 hours IST, the BSE Sensex plunged 1,849 points or 3.24 percent to 55,162.50, taking the total loss to more than 11 percent from its record high on October 19 this year.

The Nifty50 broke its crucial support level of 16,500, down 566.5 points or 3.3 percent, at 16,418.70. The index corrected 11.65 percent from its record high of 18,604, touched on  October 19 itself.

Investors have lost more than Rs 9 lakh crore of their wealth till afternoon, as the BSE market capitalisation dropped to Rs 250 lakh crore from Rs 259.4 lakh crore in the previous session.

Also read: Bloodbath on Dalal Street: Four factors behind freefall in Nifty, Sensex

In the last two months, nearly Rs 25 lakh crore of wealth has been eroded, in comparison with the market capitalisation of Rs 274.69 lakh crore on October 18, 2021.

Global markets also fall

On the global front, Japan's Nikkei and Hong Kong's Hang Seng fell more than 2 percent each, while China's Shanghai Composite was down 1 percent and South Korea's Kospi fell 1.8 percent at the time of publishing this copy.

“The benchmark indices have been falling since last week, taking cues from heavy selling in global markets on Omicron worries. The fear of another lockdown or restrictions will not only hurt the already reviving economies but will increase the bottlenecks pushing the economies several years down," says Ravi Singh, Vice President & Head of Research, ShareIndia.

The uncertainty gripping the markets is leading to heavy selling by FIIs in India and other emerging markets, he said.

"Another major reason behind the unabated selling is the measures taken towards policy tightening and liquidity reduction by major central banks to curb rising inflation. Higher rates in developed markets may force FII outflows from emerging markets as interest rate differentials reduce, making the latter less appealing for investors. These factors all together contributed to this continuous massive market sell-off worldwide," he adds.

Also read: Daily Voice | Monetary policy normalisation, disinvestment, 5G auction could be market catalysts next year: Neelkanth Mishra of Credit Suisse

Selling pressure seen across sectors

Heavy selling pressure was seen across sectors, with Nifty Bank, Auto, Financial Services, Metal and Realty being the prominent losers, falling 4-6 percent. FMCG, IT and Pharma corrected relatively less, compared to other indices, down 1.4-2.6 percent.

The broader markets also got slaughtered as the Nifty Midcap 100 and Smallcap 100 indices were down 4.8 percent each.

Volatility also spiked, given the global growth concerns. India VIX, which measures the expected volatility in the market, jumped 20 percent to 19.56 at 13:02 hours IST.

All stocks in the BSE Sensex turned red on Monday, with Bajaj Finance, IndusInd Bank, Tata Steel, SBI, NTPC, M&M and Bajaj Finserv being the biggest losers, down 4-6 percent.

FIIs have net sold shares worth more than Rs 80,000 crore in India so far in 2021, though domestic institutional investors tried to offset those outflows as they have net bought a similar amount during the year.

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