New Delhi: The stock market bloodbath on Monday eroded Investors’ wealth by Rs 17.11 lakh crore during the afternoon trade to Rs 4,40,04,979.86 crore. Led by a massive decline in its Asian peers, Indian stock market continued to bleed in the afternoon trade with BSE Sensex falling 2,686.09 points or 3.31 per cent to 78,295.86. The NSE Nifty on the other hand tanked 824 points or 3.33 per cent to 23,893.70.
Siddarth Bhamre, Head of Research, Asit C Mehta Investment Interrmediates Ltd explained 5 factors behind the Indian stock market’s decline.
1. Worsening US Job data – US non-farm payrolls were far below markets expectation and unemployment data rose to 4.3% instead of expectations of 4.1%. Rise in unemployment could reduce the probability of soft landing which FED was trying to keep interest rate higher to control inflation.
2. Reducing corporate profitability in US – Many large US companies whether in technology or consumption space have shown big correction as their earning disappointed.
3. Global Equities and Geopolitics – Global market correction led by US and geopolitical issues pertain to Iran and Israel have also added its weight to this correction.
4. Rich valuation of Indian equities – Indian markets have factored in several negatives news and continued to climb on wall of worries on back of very strong liquidity. There is not enough valuation support at this point in time.
5. High weightage of banks and IT companies – More than 50% of Nifty or Sensex weightage is of BFSI and IT companies. The external factors today have more impact on IT and banking at large and hence quantum of correction is accordingly higher.