Global worries, particularly growing tensions between Iran and Israel, have caused a major fall in equities markets over the previous three days, following a record-breaking rise that saw the BSE Sensex cross the landmark 75,000 mark last week.
Hotter-than-expected US inflation figures raised concerns that the Federal Reserve will delay implementing interest rate decreases. In addition, foreign fund withdrawals and profit-taking led to the equities market slump.
In the last three days, the BSE benchmark has dropped 2,094.47 points, or 2.79 percent. Investor wealth fell by Rs 7.93 lakh crore in three days of the market fall, owing to rising tensions in the Middle East and negative global trends.
"The market's sharp drop can be ascribed to a number of causes, including rising tensions between Iran and Israel, which have increased geopolitical uncertainty and caused risk aversion among investors.
"Furthermore, the Federal Reserve's hawkish position on inflation has changed interest rate expectations, lowering anticipation for large rate reduction. Rising geopolitical tensions in the Middle East have added to the downturn, as investors seek out safer assets in the face of uncertainty. These reasons, together, have resulted in a big fall in the market following a record surge," said Suman Bannerjee, CIO of hedge fund Hedonova.
"The latest market drop can be attributable to geopolitical concerns. Additionally, the expectation of delayed rate cuts in the United States has additional pressure. These reasons, collectively, contributed to the downturn following a period of record surge in the markets," stated Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
Swastika Investment Ltd Managing Director Sunil Nyati stated that the market corrected owing to selling in the broader market, weak global cues, selling by Foreign Institutional Investors (FIIs), an imminent US Federal Reserve meeting, and rising crude oil prices. According to Nyati, widespread selling across numerous sectors and equities might lead to an overall market downturn as investor mood grows negative.
"India is a major importer of crude oil, and higher oil prices can negatively affect the country's trade balance, inflation, and fiscal situation," Nyati said in a statement.
The BSE Sensex reached an all-time high of 75,124.28 on April 9. The index surpassed the historic 75,000 milestone for the first time on the same day. On April 10, the 30-share BSE benchmark crossed the 75,000 level for the first time.
On April 8, BSE-listed businesses' market capitalisation surpassed the coveted Rs 400 lakh crore barrier for the first time. From February 29 to April 10, the BSE benchmark rose 2,537.85 points, or 3.50 percent.
However, since April 12, the markets have been sliding.
