Investors lose Rs 9.51 lakh crore as Sensex crashes 2,600 points

Investors lose wealth: Investors witnessed a massive erosion of wealth amounting to Rs 9.51 lakh crore on Monday morning as the Indian equity markets experienced a significant downturn. The benchmark Sensex dropped more than 2,600 points, reflecting a broader global sell-off that rattled market sentiment worldwide.

The 30-share BSE benchmark index fell sharply by 2,686 points to 78,295. The dramatic decline led to a substantial reduction in the market capitalisation of BSE-listed companies, which fell by Rs 9,51,771.37 crore to Rs 4,47,65,174.76 crore (approximately $5.35 trillion).

"The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the USA after extremely poor jobs data, which spooked market sentiment," commented Santosh Meena, Head of Research at Swastika Investmart Ltd.

The downturn marks a significant correction in global markets, coming after a prolonged period of bullishness. Key Asian markets, including Seoul, Tokyo, Shanghai, and Hong Kong, were also trading lower. Japan's Nikkei 225 index plummeted as much as 8.1 per cent early Monday, exacerbating the negative trend seen in world markets last week due to escalating concerns over the US economy.

The US markets closed substantially lower on Friday, driven by disappointing job creation numbers for July and a sharp increase in the unemployment rate to 4.3 per cent. These factors have raised doubts about the previously anticipated "soft landing" for the US economy, which had bolstered global stock markets.

"The rally in the global stock markets has been driven mainly by consensus expectations of a soft landing for the US economy. This expectation is now under threat with the fall in US job creation in July and the sharp rise in the US unemployment rate to 4.3 per cent. Geopolitical tensions in the Middle East also are a contributing factor," noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Among the Sensex components, Tata Motors, Maruti, Tata Steel, Infosys, Tech Mahindra, and JSW Steel were the major decliners. In contrast, stocks like Hindustan Unilever, Sun Pharma, Nestle, and Asian Paints managed to stay in positive territory.

The sell-off also saw Foreign Institutional Investors (FIIs) divesting equities worth Rs 3,310 crore on Friday, according to data from exchanges. This widespread selling pressure underscores the prevailing investor unease amid global economic uncertainties and geopolitical tensions.

(With PTI inputs)