In an unprecedented turn of events, the Indian stock market faced a severe meltdown on Tuesday, leaving investors in shock as they witnessed a significant loss of Rs 30 lakh crore. The benchmark BSE Sensex nosedived by over 4,300 points, marking its worst performance in four years and erasing all its gains for 2024. This sharp decline mirrored the market turmoil seen at the onset of the Covid-19 pandemic.
The broader NSE Nifty also experienced a substantial drop of 1,379 points, or 5.93%, closing at 21,884. The market capitalization of all listed companies on the BSE took a severe hit, with Rs 29.9 lakh crore wiped off, reducing the total to Rs 396 lakh crore. At one point during the day, indices plummeted as much as 8.5%.
This market crash followed the unexpected outcome of the general election, where vote-counting trends indicated that Prime Minister Narendra Modi’s alliance might fall short of the anticipated landslide victory. The sharp decline came just a day after indices had jumped over 3% following exit polls projecting a two-thirds majority for the BJP-led alliance in the lower house.
“The unexpected outcome of the general election sparked a wave of fear selling in the domestic market, reversing the recent substantial rally,” stated Vinod Nair, Head of Research at Geojit Financial Services.
As of 3:45 pm, the National Democratic Alliance (NDA) was leading in nearly 293 seats, falling short of the magic number of 272 required for a simple majority in the 543-member lower house of parliament. Adani Group stocks bore the brunt of the market sell-off, closing 10-21% lower. Among the Sensex pack, NTPC, SBI, L&T, and Power Grid suffered losses ranging from 12-15%.
The crash wasn’t limited to large caps. Smallcap and midcap indices also closed 8.2% and 7.9% lower, respectively. Almost all sectoral indices closed in deep red, with Nifty Bank falling 8%, Realty down 9.6%, PSU Bank plummeting 15%, Oil & Gas dropping 11.8%, and Metal declining 10.6%.
The market’s woes continued into Wednesday, with the 30-share BSE Sensex declining an additional 416.1 points to drop below the 75,000-mark, settling at 74,754.35. The NSE Nifty also dropped by 125.9 points to 22,762.25. Mahindra & Mahindra, IndusInd Bank, HDFC Bank, Tech Mahindra, Axis Bank, and ICICI Bank were the biggest laggards, while Bharti Airtel, Tata Steel, Power Grid, and State Bank of India emerged as gainers.
The extended fall led to an additional loss of Rs 1.3 lakh crore in BSE market capitalization, bringing the total investor wealth down to Rs 415.58 lakh crore from Rs 416.92 lakh crore in the previous session. Among the stocks, 34 hit their 52-week low levels, including BSE 500 stocks such as Anupam Rasayan India Ltd and KRBL.
Out of 3,644 stocks, 1,926 stocks declined on the BSE, 1,571 stocks advanced, and 147 stocks remained unchanged. The cautious sentiment among investors ahead of the final Lok Sabha election results, coupled with weak cues from Asian markets, contributed to the prolonged downturn.
The stock market’s dramatic decline serves as a stark reminder of the volatility and unpredictability inherent in the financial markets, particularly during periods of political uncertainty. Investors are now anxiously awaiting the final election results, hoping for a stabilization in the markets.
