BSE Sensex Index Falls by 1400 Points After Sharp Rise, Stock Market Crashes

Chaos was once again observed in the stock market on Monday as the Sensex and Nifty indices sharply fell, leading to significant losses for investors. The BSE Sensex index, comprising 30 stocks, lost about 1200 points from its daily high, while the NSE Nifty also dropped by more than 200 points.

Despite the slowing pace of the decline of both indices by the time trading closed, Sensex finished the session down by 547 points, and Nifty by 157 points. After a sharp initial rise, shares of giants such as Reliance, Tech Mahindra, and ITC experienced a significant drop.

Trading on the stock market on Monday began with a vigorous rise. Sensex on the BSE immediately jumped by 350 points, and Nifty on the NSE traded up by more than 100 points. However, just a few minutes after the market opened, Sensex and Nifty began to fall, seemingly collapsing. Around 2:30 PM, the BSE Sensex was losing 780 points, which accounted for about 1200 points from the daily high, with the index at the level of 71,676. By the close of trading, it had fallen by 547 points and settled at 71,924.

As for the Nifty index, which consists of 50 stocks, it showed a similar trend. Opening at 22,593 compared to the previous close of 22,520, its rise suddenly halted. The index quickly fell by approximately 200 points, reaching 22,312. In the last half hour of trading, the rate of decline slowed, but the index still closed at 22,363, losing 157 points.

The reasons for the stock market crash on Monday include several factors. Firstly, profit booking played a significant role. Following the initial rise in the market, active selling occurred at peak levels, putting pressure on market movement.

Secondly, the Dollar Index remaining at 102 created pressure on emerging markets. It should be noted that there is an inverse relationship between the Dollar Index and emerging market stocks. This led to conflicting signals for Sensex and Nifty from Asian markets: while Hong Kong's Hang Seng and the UK's FTSE-100 showed green zones, Japan's Nikkei continuously traded in the red zone. South Korea's Kospi index fell by approximately 4%. Furthermore, selling by foreign investors continued, as it did last week, negatively affecting sentiment.

Another indicator of deteriorating sentiment for the Indian stock market is the rise in the India VIX, which serves as a measure of fear. On the first working day of the week, the India VIX jumped by approximately 7%, exceeding the 15.50 mark, indicating impending turbulence in the stock market.

In the context of this market crisis, various categories of stocks were most affected. As of the writing of this article, ITC (3.23%), Tech Mahindra (3.10%), HUL (2.10%), SBI (1.78%), TCS (1.67%), and Reliance (1.01%) in the large-cap category of BSE were trading in the negative.

In the mid-cap segment, declines were recorded for Fortis (3.52%), Colpal (2.75%), and Voltas (1.74%). Among small-cap companies, price decreases were also observed for Asterdm (3.30%) and WockPharma (1.71%).

For investors engaged in the stock market, Thursday proved to be an extremely unfavorable day. Both market indices experienced a crash, leading to substantial losses among depositors. Shares of companies such as Reliance Industries Mukesh Ambani and Adani Ports Gautam Adani declined significantly. Estimates suggest that by noon, investors had lost over 100 billion rupees.

Sensex and Nifty Decline

Although trading on the stock market began with minor fluctuations on Thursday, the Sensex and Nifty indices started to fall rapidly as the day progressed. By the time of writing, the 30-point BSE index, Sensex, had dropped by more than 1000 points, reaching the level of 71,567. Meanwhile, the 50-point NSE index, Nifty, slipped by more than 350 points, settling at 22,231.

Investor Losses Due to Market Collapse

As a result of the stock market collapse, investors incurred serious financial losses. The loss calculation can be made by examining the changes in the market capitalization of companies listed on the Bombay Stock Exchange. On the previous business day, Wednesday, the BSE market capitalization closed at 472,35,273.39 crore rupees. However, by noon on Thursday, this figure decreased to 462,24,649.53 crore rupees, meaning investors lost 10,10,624 crore rupees.

Stocks That Surprised Investors

Among the stocks that dealt the biggest blow to investors during the market turmoil were Reliance and Adani Ports shares. Companies showing declines included ITC (4.20%), Adani Ports Share (4.10%), PowerGrid Share (2.78%), Reliance Share (2.72%), BEL Share (2.70%), Bajaj Finance Share (2.25%), and Maruti Share (2.11%). Additionally, Paytm Share (5.10%) and Suzlon Share (4.10%) also fell.

Concern from Japan to South Korea

The collapse was observed not only in the Indian stock market but also in Asian markets on Thursday. The Nikkei index of Japan fell by 1000 points, the Hang Seng index of Hong Kong by 400 points, and the Kospi index of South Korea by 200 points. Furthermore, the UK's FTSE-100 index decreased by approximately 1%, as did the CAC and DAX indices.

Red Signal from Gift Nifty

It is worth noting that Gift Nifty, which is a key indicator for the Sensex-Nifty indices, also plummeted on Thursday at the opening of trading. While the Sensex-Nifty experienced a decline, Gift Nifty showed a drop of 275 points. It opened at 22,579 and then fell to 22,278.