Stock Market Crash: Investors Lose Over 5 Lakh Crores As Sensex Drops 800 Points (image source: Canva)
Indian benchmark equity indices Nifty and Sensex opened the week on a downward trajectory on Monday, echoing losses seen in Asian markets. Investor sentiment remained subdued following Iran’s retaliatory attack on Israel over the weekend, sparking concerns of a broader regional conflict.
The Sensex dropped by 887.82 points, or 1.20 per cent, to 73,357.08, while the Nifty declined by 181.75 points, or 0.81 per cent, to 22,337.65.
Among the Nifty companies, 5 witnessed advances, while 45 registered declines.
Notable gainers included Hindalco, ONGC, TCS, Nestle India, and HCL Technologies, whereas BPCL, Coal India, Tata Consumer Products, Tata Motors, and Adani Enterprises were among the top losers
In tandem with the drop in stock prices, the market capitalization of all listed companies on the BSE plummeted by Rs 6 lakh crore to Rs 393.77 lakh crore, as per a ET report.
Reasons Behind The Market Crash
Israel Iran Conflict
Iran retaliated against Israel’s suspected strike on its consulate in Damascus by launching a drone missile attack on Saturday night. This escalation resulted in the deaths of seven Iranian Revolutionary Guard Corps personnel, including two generals.
The equity markets, including Sensex and Nifty, witnessed significant declines on Monday due to concerns among investors regarding the potential fallout from Iran’s unprecedented military action against Israel. Analysts suggest that the market, already at an all-time high, is particularly sensitive to geopolitical tensions, which could trigger a knee-jerk reaction.
Asian Markets
Asian markets started the week cautiously, with MSCI’s Asia-Pacific shares index (excluding Japan) falling by 0.7 per cent following Iran’s missile attack on Israel. Japan’s Nikkei experienced a decline of over 1 per cent, while Australia’s S&P/ASX 200 index and Hong Kong’s Hang Seng Index also saw losses of 0.6 per cent and 0.8 per cent, respectively.
Treasury Yields Maintain Recent Peaks
US Treasury yields remained near their recent highs as traders adjusted their expectations regarding the Federal Reserve’s rate cut plans for the year. The benchmark 10-year yield stood at 4.5277 per cent, while the two-year yield hovered around 4.8966 per cent.
Dollar Index Rises
The Indian rupee depreciated by 5 paise against the US dollar, trading at 83.36 in early trade. The dollar index, reflecting the greenback’s performance against six major currencies, reached 105.94. Moreover, the dollar strengthened to a 34-year high against the yen amid expectations of sustained inflationary pressures in the United States, potentially leading to prolonged higher interest rates.
Oil Impact
Oil prices remained relatively stable despite the escalation in geopolitical tensions. Brent crude futures, which had surged to USD 92.18 per barrel last week, only experienced a modest decrease to USD 90.01 per barrel. Similarly, US West Texas Intermediate crude futures fell slightly to USD 85.13 per barrel, indicating that traders had largely factored in the possibility of supply disruptions from a retaliatory attack by Iran.
