Sensex Plunge Today: Understanding the Reasons Behind the Indian Stock Market’s Downturn and the Factors Responsible for the Loss of 3.71 Lakh Crore
Indian equity indices experienced a downward trend on March 19, with heavyweights like TCS, Reliance Industries, and Infosys dragging the market. This decline was not isolated to India, as Asian peers also faced losses ahead of the US Federal Reserve’s policy decision later in the week. The Sensex shed over 600 points, dropping below the 72,200 level, while the Nifty fell below the 21,900 mark. The market capitalization of all listed companies on the BSE declined by ₹3.71 lakh crore, reaching ₹375.08 lakh crore. Here are the key reasons behind the Sensex crash today:
Global Effect:
- Asian stock benchmarks remained under pressure, with Hong Kong’s technology shares and South Korean equities experiencing losses of more than 1% each. US contracts also indicated potential losses, while Japan’s Nikkei share average fluctuated between small gains and losses. This downturn followed the Bank of Japan’s announcement of an end to its long-standing ultra-accommodative stimulus programs.
TCS Block Deal:
- TCS witnessed a 3% decline after a block deal involving 2.02 crore or 0.6% shares took place on the counter. This significant transaction contributed to the downward pressure on the stock, affecting other IT giants like HCL Tech, Wipro, and Infosys. Consequently, the IT index emerged as the worst sectoral loser of the day, experiencing a 2% decline.
Foreign Portfolio Investors (FPIs) Selling:
- Foreign portfolio investors sold Indian shares worth ₹2,051 crore on a net basis on this particular day. This selling pressure from FPIs added to the negative sentiment in the market, contributing to the overall downturn.
Oil Price Fluctuations:
- Oil prices exhibited volatility, initially edging down after recent gains. The prospect of increased supply from Russia contributed to this fluctuation. Additionally, concerns regarding slower-than-expected downstream demand, particularly in sectors such as jet fuel, may have influenced market sentiment. Although Brent crude remained above $86 per barrel, the impact of oil prices on the stock market cannot be ignored.
Overall, these factors collectively contributed to the Sensex crash witnessed on March The global economic environment, coupled with specific developments in the IT sector and foreign investor activity, played a significant role in shaping market sentiment. Additionally, the volatility in oil prices added to the uncertainties, further impacting investor confidence. As the market continues to navigate through these challenges, investors closely monitor developments both domestically and internationally to make informed decisions.