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Monday Mayhem: Sensex crashes 1624-pts; erodes Rs 7 lakh crore wealth

In the bloodiest carnage on Dalal Street, the stock market benchmark Sensex today crashed by 1,624.51 points -- its biggest single-day fall -- and over Rs 7 lakh crore got wiped out within hours from the investors’ wealth on a sharp global sell-off triggered by a Chinese rout.

The index ended the day 5.94 per cent down at 25,741.56 points as jittery investors sold shares across all sectors including energy, banking, auto, IT, infrastructure and real estate, even as Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan sought to soothe the frayed nerves saying fundamentals of Indian markets remain strong.

The rupee was also not untouched by the carnage, which hit a fresh two-year low of 66.66 versus the US dollar, hitting the investors’ appetite hard.

The downfall began right at the word go when markets opened this morning and the BSE’s 30-share index fell by as much as 1,741.35 points in the intra-day before recouping a small portion of the losses.

In percentage terms also, the full-day loss was biggest in six and half years since a 7.25 per cent plunge on January 7, 2009. In terms of intra-day fall, today’s plunge is highest in over seven years since a 2,062-point rout on January 21, 2008. Overall, this was the third-highest intra-day fall.

Sentiment also took a knock after crude oil prices softened to multi-year lows amid deepening concerns about weak Chinese growth and global oversupply.

The total investor wealth, measured in terms of cumulative market value of all listed stocks, tanked by more than Rs 7 lakh crore and crashed below Rs 100-lakh crore mark to end the day at Rs 95,33,105 crore.

Though notional in nature, promoters of listed companies accounted for over half of these losses at about Rs 4 lakh crore while foreign investors also took a hit of close to Rs 1.5 lakh crore. The loss in the accounts of retail investors is estimated at about Rs 75,000 crore while institutional investors also took a hit of about Rs 1 lakh crore.

The broader 50-share NSE Nifty was no exception and witnessed heavy selling pressure and plunged 490.95 points to end the day at 7,809, down 5.92 per cent. The BSE small-cap and mid-cap indices plunged even more by 8.81 and 7.68 per cent, respectively.

"The two important factors which led to today’s chaos are the sharp fall in the rupee due to the increase in risk to emerging market currencies and the high demand for the Offer for Sale of state-run Indian Oil requiring a total outflow of Rs 9,400 crore," said Vinod Nair, Head, Fundamental Research, Geojit BNP Paribas Financial Services.

Kotak Securities’ Dipen Shah said the global risk-off trade has impacted Indian equity markets also, but added that there were some positive longer-term takeaways, including the plunge in crude prices to USD 44 per barrel.

Shanghai Composite Index tumbled 8.49 per cent tracking a weaker US market. European markets dropped too in the opening trade amid the fierce global sell-off.

Foreign portfolio investors net sold shares worth Rs 2,340.60 crore on Friday, as per provisional data.

In terms of full-day loss, this is only the second instance when the Sensex has closed the day with a plunge of over 1,000 points -- the first being a 1,408.35 points crash on January 21, 2008.

On intra-day basis, this was the eighth time when Sensex suffered a loss of over 1,000 points while the first seven such instances took place during 2008.

"An end to this cascade will depend on the likelihood of an immediate RBI intervention to support the rupee. An end to the further downgrade in emerging market economies will specifically depend on China," added Nair.