Investors suffer massive loss of ₹2.83 lakh crore due to stock market decline

Investors have suffered heavy losses due to the slump witnessed during early trade in the Indian stock market on Friday. According to a report by Sandesh (Business), a significant decline in investors' wealth was recorded within just seven minutes of the trading session commencing. BSE market capitalisation figures show that the market capitalisation stood at ₹5,09,44,186.57 crore in early trade on Friday, compared to ₹5,12,27,177.05 crore on the previous day. This means that value has decreased by ₹2,82,990.48 crore for investors.

Following gains seen in the previous few sessions, investors chose to engage in profit-booking, resulting in both Sensex and Nifty trading in the red with declines. In early trade on Friday, the Sensex fell by 241.24 points or 0.29% to reach the level of 81,669.77. On the other hand, Nifty was trading at the level of 25,190.15 with a decline of 109.20 points or 0.43%. The pressure in the market was not limited to only large-cap stocks, as Nifty Midcap and Smallcap indices also witnessed a decline of approximately 0.5%.

The number of stocks trading with declines was higher than the number of advancing stocks. In early trade, approximately 1,443 stocks were seen to increase, while 1,685 stocks were in decline and 202 stocks remained unchanged. Sector-wise, the auto, private bank, IT, and realty indices declined by approximately 0.5% to 1%. In contrast, the pharma index increased by approximately 0.5% and strength was also seen in healthcare-related stocks.

Among the stocks included in Nifty, the highest increases were seen in shares of Cipla, ONGC, Dr. Reddy's Labs, Max Healthcare, and SBI. On the other hand, declines were recorded in the shares of Shriram Finance, InterGlobe Aviation, Maruti Suzuki, Jio Financial, and TMPV.

A major reason behind this pressure on the stock market is the rising prices of crude oil. The price of Brent crude oil has reached approximately $95.23 per barrel, whereas it was approximately $92 per barrel when the market closed on Thursday. Concerns regarding oil supply have increased due to attacks on Saudi Arabia's energy infrastructure and fears of potential disruption in shipping movement in the Strait of Hormuz. As India relies on crude oil imports for its requirements, rising oil prices could put pressure on the country's import bill, corporate expenses, and inflation.

In India, retail inflation increased to 6.09% in October, which is above the Reserve Bank of India's (RBI) upper limit of 6%. An 8.94% surge in food prices plays a significant role in this inflation. Due to rising inflation, it may become difficult for the RBI to reduce interest rates, which is affecting investor sentiment.

Despite the slump in the market, Foreign Institutional Investors (FIIs) are continuing to invest in Indian equities. On Thursday, foreign investors made a net purchase of approximately ₹7,831 crore, which was the ninth consecutive trading session. Foreign investment in November so far has reached approximately $8 billion, which is the highest monthly inflow since December 2020. Despite the decline on Friday, Sensex and Nifty have increased by approximately 1.1% so far this week, and the market is expected to record profits for the third consecutive week. On Thursday, Nifty 50 closed at approximately the level of 25,299.35.