Sensex Crash: 1,000 Points Fall Wipes ₹5 Lakh Crore

The stock market witnessed a dramatic downturn on Monday, with the Sensex crashing by 1,000 points, causing a loss of nearly ₹5 lakh crore in market capitalisation on the Bombay Stock Exchange (BSE). This significant dip has rattled investors, highlighting the volatility of global markets, especially with looming concerns about US economic data.

Key Market Figures
The S&P BSE Sensex fell by 1,070.69 points, trading at 81,130.47 by 2:31 PM, while the NSE Nifty50 dropped 314.10 points to settle at 24,831. This downturn impacted broader market indices, including midcap and small-cap stocks, with overall volatility spiking over 8%.

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Major Sectoral Impact
The sell-off was widespread, affecting every sector. Leading the fall were giants such as Reliance Industries, SBI, ICICI Bank, L&T, Infosys, ITC, HCL Tech, and HDFC Bank. Reliance’s shares fell by 1.8%, while major banking stocks like Axis Bank, ICICI Bank, and SBI saw significant losses. Notably, SBI’s shares dropped over 4%, following a sell recommendation from Goldman Sachs.

What Triggered the Market Bloodbath?
The market rout was mainly driven by investor anxiety ahead of the US jobs report, expected to influence the Federal Reserve’s stance on interest rate cuts. Recent comments from Federal Reserve Chair Jerome Powell hinted at concerns over the weakening US labor market. Analysts are forecasting the addition of 165,000 new jobs and a potential unemployment rate drop to 4.2%. However, fears of a larger-than-anticipated rate cut have grown.

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Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that a weaker-than-expected jobs report could prompt a significant rate cut, which might further unsettle the markets. Additionally, the downturn in Indian stocks was amplified by declining bank shares and concerns about upcoming data on loan and deposit growth.

Indian Banking Sector Woes
The Reserve Bank of India’s recent data showing an 11.7% increase in deposits against a 15% rise in bank credit has widened the gap, raising potential liquidity concerns. Market analysts noted that the widening gap between deposits and credit growth could be a critical factor affecting the financial stability of banks.

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Santosh Meena, Head of Research at Swastika Investmart Ltd., mentioned that this market drop follows a period of consolidation at highs. With weaker US job data raising fears of a global economic slowdown, investors are bracing for a period of heightened volatility.

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