Stock market crash explained: Rs 7 lakh crore gone! Why Sensex has dropped 1,500 points in just 4 days
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, recent market action has lacked a clear trend or direction, with movements in a handful of large stocks exerting an outsized influence on overall indices.
He noted that “For instance, yesterday despite positive institutional buying Nifty drifted down by 71 points, mainly due to sharp declines in two stocks- Reliance and HDFC Bank. The large volumes in these two stocks in the derivative and cash market indicate activity associated with settlement day.
In other words, the sharp dips in these stocks have nothing to do with their fundamentals; it is more technical in nature.”The prolonged selloff has eroded investor wealth, with the combined market capitalisation of all companies listed on the BSE shrinking by Rs 7.19 lakh crore over the four-day period to Rs 474 lakh crore, according to an ET report.
Why is the stock market crashing?
500% tariffs threat: US President Donald Trump has indicated backing for a bipartisan sanctions proposal targeting Russia that could levy tariffs of at least 500 percent on Russian imports, a move aimed at pressuring countries such as India, China and Brazil that continue to buy discounted Russian crude.
Although the bill is yet to be cleared by lawmakers, Senator Lindsey Graham has said it could be brought up for a vote as soon as next week.Trump has also warned that Indian exports could face steeper duties if New Delhi fails to respond to Washington’s concerns over its Russian oil buys.
At present, Indian goods entering the US are already subject to tariffs of up to 50 percent, with around half of that explicitly linked to India’s crude imports from Russia.The broader trade relationship between the two countries remains strained.
Trump recalled that Prime Minister Narendra Modi had personally raised the issue of early delivery of US-made Apache helicopters during a meeting, describing the exchange in detail.Together, these signals underscore how the expanding use of US sanctions and tariff threats is shaping investor sentiment in India, introducing fresh uncertainty at a time when markets are already on edge.Large-caps pull down benchmarksLarge-cap stocks continued to weigh on the broader market on Thursday, as persistent selling in heavyweight names kept benchmark indices under pressure.
Shares of HDFC Bank and Reliance Industries extended their decline, slipping by as much as 1 percent.
Earlier in the week, losses of up to 4 percent in these two stocks had already contributed significantly to the slide in the headline indices.Sector-wise, metals saw the sharpest fall, with the metal index dropping 1.9 percent as all 15 of its constituents retreated after hitting record highs earlier in the week.
The IT index also moved lower, easing 1 percent after having risen 2.4 percent over the previous two sessions.
Apparel retailer Trent remained under stress, shedding another 1 percent after plunging as much as 9 percent earlier in the week amid concerns over intensifying competition.Political turmoil in VenezuelaEvents in Venezuela have remained a key global focus, with their immediate impact felt largely across commodity markets.
The abrupt political shock has added to geopolitical risks, especially given Venezuela’s vast oil reserves, raising concerns about potential repercussions for global energy markets.“Trump tweets and actions can always influence the market.
Another important event which investors should closely watch is a possible Supreme Court verdict on Trump tariffs very soon.
If the verdict goes against the reciprocal tariffs it will create huge volatility in stock markets,” said Dr.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments.Global markets lose momentumEquity markets across Asia traded mostly in the red on Thursday, as investors turned cautious after a strong start to the year.
MSCI’s broad Asia-Pacific index excluding Japan slipped 0.6 percent, while Japan’s Nikkei fell 1.2 percent and China’s CSI300 blue-chip index declined 0.8 percent.
Futures markets also signalled a muted tone, with Nasdaq futures down 0.35 percent, S&P 500 futures marginally higher by 0.22 percent, EUROSTOXX 50 futures lower by 0.12 percent and FTSE futures easing 0.4 percent.Sentiment was dampened by rising geopolitical risks and trade-related developments, including China’s anti-dumping investigation into imports of chemicals used in semiconductor manufacturing.
The move weighed on Japanese chemical companies while lending support to their Chinese counterparts.
Investors also remained focused on the upcoming US employment data for cues on the Federal Reserve’s interest rate outlook. Analysts at Goldman Sachs expect nonfarm payrolls to rise by 70,000 in December, with the unemployment rate seen edging down to 4.5 percent, according to Reuters.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own.
These opinions do not represent the views of The Times of India)
