Investors Hit Hard With $11 Lakh Crore Losses In 8 Sessions.

Investors Hit Hard with $11 Lakh Crore Losses in 8 Sessions.

There has been a lot of uncertainty in the Indian stock market recently, and the previous eight trading days have been particularly trying for traders. The market caved into selling pressure in the first session of March 20 and was unable to extend its comeback from late last week.

Around Rs 2 lakh crore in investor value was lost due to the market benchmark indexes’ more than 0.6 per cent correction. On the daily charts, the Nifty50 dropped 112 points to 16,988, wiping away the previous day’s gains in the process. Both the BSE Sensex and the Nifty50 saw significant drops, with the former dropping 361 points to 57,629 and the latter dropping 112 points to 16,988.

The continued banking crisis in the US and Europe, caution ahead of the US FOMC meeting on March 21–22, and stable FII flows all had an impact on sentiment. Recent global events, when gold prices approached $2,000 per troy ounce on worldwide markets, appear to have caused investors to move their money to safe-haven assets.

The US banking crisis continued to take centre stage, keeping the participants on their toes. Ajit Mishra of Religare Broking claims that there are now more worries due to the continued outflow of foreign investment.

Investor value decreased by Rs 2 lakh crore as the BSE market capitalization dropped from Rs 257.52 lakh to Rs 255.47 lakh. While the market capitalization has decreased from Rs 266.24 lakh crore on March 8 to Rs 10.77 lakh crore, investors have lost Rs 10.77 lakh crore of wealth. This is especially true following the last swing high.

With the exception of FMCG, the majority of sectors fell victim to a bear trap, with Metals plunging by more than 2%. The BSE Midcap and Smallcap indices both fell 1% as selling pressure spread to the broader markets.

As news broke that UBS would acquire Credit Suisse for $3.2 billion, stock markets in Asia and Europe fell. UBS estimates that the combined bank will have $5 trillion in invested assets following the emergency bailout.

The CAC in France, the DAX in Germany, and the FTSE in Britain were all down between 0.6 and 1.2 per cent, while the Hang Seng in Hong Kong was down 2.65 per cent, followed by the ASX 200 in Australia and the Nikkei in Japan, both of which were down 1.4 per cent. The Shanghai Composite in China and the Kospi in South Korea both decreased by about 0.5 per cent.

Market Penetration

About two equities sank for every stock that jumped on the BSE at home due to the extremely tense market. Ninety-six stocks on the BSE reached a 52-week high on Monday, while 387 stocks on the BSE reached their 52-week low. The equities that hit a one-year low included more than 60 companies from the BSE ‘A’ group, which is the most liquid.

Aarti Drugs, Aavas Financiers, Astec Lifesciences, Avanti Feeds, Balaji Amines, Bata India, Biocon, Blue Dart, Century Plyboard, Crompton Greaves Consumer Electricals, Dilip Buildcon, Emami, HDFC AMC, Dr Lal PathLabs, Laurus Labs, Max Financial Services, Mphasis, Nippon Life, Nazara Technologies, Piramal Enterprises, Reliance Industries, Trident, Uflex, TTK Prestige, V-Mart and Wipro are some of the stocks that hit a 52-week low.

The sum of stocks that reached either the upper or lower circuit (257) was greater than the sum of the two (176). In anticipation of the conclusion of a two-day US Fed policy meeting, the market might be cautious.

On March 22, the Fed is expected to raise interest rates by 25 basis points, down from earlier predictions of a 50-basis-point increase. This is especially true in the scenario of the recent US banking crisis, which resulted in the bankruptcy of SVB, the closure of Signature Bank, and First Republic Bank receiving financial assistance from 11 US banks.

The market has changed its expectation from a 50 to a 25 bps raise, with a probability of 70%, for the Fed’s interest rate decision due on Wednesday. Keep in mind that whenever the Fed stops raising interest rates, there usually comes a crisis and something cracks, according to Amit Pabari, MD of CR Forex Advisers.

Factors Contributing to the Market Correction

Several factors have contributed to the recent market correction. One of the main reasons is the ongoing banking crisis in the US and Europe, which affected regional financial markets worldwide. Investors are worried about the crisis’ possible effects on the global economy and the state of the banking industry.

The market slump has been exacerbated by apprehension about the upcoming March 21-22 FOMC meeting of the US Federal Reserve. Investors are watching this meeting for Fed monetary policy signals that could impact global financial markets.

In addition to these factors, consistent FII (Foreign Institutional Investor) flows have weighed on sentiment. Investors are closely watching the FII flows, as they are an important indicator of foreign investors’ confidence in the Indian economy.

Safe-Haven Gold

Due to recent global events, investors appear to have transferred their wealth to safe-haven assets, sending gold prices soaring beyond $2,000 per troy ounce on global markets. Gold is seen as a safe investment during times of uncertainty and is often used as a hedge against inflation and currency fluctuations.

Impact on Investor Wealth

The recent market correction has resulted in a significant loss of investor wealth. According to reports, investors have lost over $11 lakh crore in the last eight sessions. This loss is a significant blow to investors, and many are now wondering how to protect their investments in these uncertain times.

The recent market correction has highlighted the need for investors to be cautious and to take steps to protect their investments. While it is impossible to predict the future direction of the markets, investors can take steps to diversify their portfolios, invest in safe-haven assets, and seek professional advice. By being proactive and taking a long-term view, investors can weather the current market turbulence and emerge stronger in the long run.

Edited by Prakriti Arora