- Recent downturn highlights the fragility of investor sentiment in the face of geopolitical uncertainties and regulatory changes.
MUMBAI: In the past five trading sessions, the Indian stock markets have seen an erosion of approximately Rs13 trillion in investor wealth.
According to Bombay Stock Exchange (BSE), market capitalisation stood at Rs479 trillion, but this has plummeted to ₹466 trillion, marking a significant loss of approximately 2.71 per cent.
Both major indices, the Nifty and the Sensex, have faced relentless selling pressure, each declining by over 4 per cent during this period.
The downturn comes on the heels of a remarkable rally the markets experienced last week, following the announcement of an interest rate cut by the US Federal Reserve.
Confidence erodes
The development had invigorated investor confidence, leading to extensive foreign investments and driving both the Nifty and Sensex to record highs, with the Sensex achieving a peak of 85,978.25 points and the Nifty reaching 26,277.35 points.
However, the current market dynamics have shifted dramatically. Analysts attribute this regression to a confluence of factors, notably rising geopolitical tensions, particularly the escalating conflict between Iran and Israel. Such uncertainties have made investors wary, prompting a strategic withdrawal of funds from Indian markets.
Moreover, a noticeable shift in foreign investor interest toward market alternatives in China and Hong Kong has exacerbated pressures on Indian equities. The recent changes enacted by the Securities and Exchange Board of India (SEBI) in the Futures & Options (F&O) market have further compounded the prevailing pessimism among investors.
