Stock Market Crash: Investors lost 9 lakh crores; What caused the tsunami in the stock market?

 Stock Market Crash: Investors lost 9 lakh crores; What caused the tsunami in the stock market?

The Indian stock market witnessed a huge decline on Tuesday. Both the major indices - Sensex and Nifty - fell by more than 1 percent each. The smallcap and midcap indices fell by 4 percent. Only 1 stock in the Sensex top 30 remained in the green. Investors lost Rs 9 lakh crore. Let us know what caused the Indian stock market to crash.

Business Desk, New Delhi. The Indian stock market is witnessing a huge decline today. Sensex closed down by 930 points and Nifty by 303 points. Many stocks saw a decline of up to 5%. Among the Sensex top 30, only ICICI Bank, Nestle India and Infosys saw a slight increase. The shares of the remaining 27 companies closed in the red.

Today's fall in the Indian stock market has wiped out investors' wealth worth Rs 9 lakh crore. The smallcap and midcap indexes have fallen by 4 percent. Let us know what is the reason for this tsunami in the Indian market.

Poor quarterly results of companies

The valuation of the Indian market and many companies is quite high. But, the results of many companies are not justifying their valuation. Bajaj Auto, Kotak Mahindra Bank and RBL Bank are examples of this. The shares of all these saw a huge decline after the quarterly results. Investors did not seem happy with the quarterly results of Reliance Industries either.

Foreign investors sell off

Foreign Portfolio Investors (FPIs) are continuously selling in the Indian stock market. So far in October, FPIs have withdrawn a record Rs 82,479 crore from Indian equities. Earlier in March 2020, during the COVID-19 pandemic, FPIs had sold Indian shares worth Rs 65,816 crore. However, this loss is being compensated by domestic institutional investors (DII) purchases, but it still seems insufficient.

High valuation of Indian market

The valuation of the Indian stock market is also quite high. This is the reason why foreign investors are turning to markets like China and Hong Kong, which are relatively cheaper. The Chinese government has also announced a financial stimulus package. Along with this, the central bank there has also cut the policy interest rates. This is making the Chinese stock market even more attractive for investment. At the same time, the Indian market seems to be in a state of instability.