Stock Market Crash Today: A Sharp Decline on the Last Day of the Week
The stock market ended the week in deep red, witnessing a significant decline. Since last September, the market has fallen by 1.9 percent, and investors have lost 18 percent of their profits. Last year, on September 26, 2024, the market had reached its peak. However, as of today, the Sensex has dropped by 16 percent (12,256 points), while the Nifty has fallen by 18 percent (3,991 points).
Today, the BSE Sensex fell by 1,400 points, closing at 73,201, while the Nifty declined by 426 points, settling at 22,119. The market downturn is attributed to both national and international factors.
Major Impact on Investors
The steep decline in the Sensex and Nifty has dealt a severe blow to investors. As a result, investor wealth has plunged by Rs 6.72 lakh crore, bringing the total market capitalization down to Rs 386.38 lakh crore. All sectoral indices witnessed a downturn, with IT, auto, media, and telecom stocks facing heavy selling pressure, leading to a 2-3 percent decline in each sector. BSE Midcap and Smallcap indices also suffered losses.
Reasons Behind the Market Crash
1. Weak US Economic Data
Concerns among investors have grown due to weak US GDP figures. The US economy is slowing down, with GDP growth in the fourth quarter at just 2.3 percent, much lower than expected. This has negatively impacted global markets, leading foreign investors to withdraw large amounts of capital from the Indian market.
2. Donald Trump’s Decision to Increase Import Tariffs
Former US President Donald Trump has announced an increase in import tariffs on Mexico, Canada, and China. Starting March 4, a 25 percent tax will be imposed on goods from Mexico and Canada, along with an additional 10 percent tariff on Chinese imports. Trump has also threatened to impose a 25 percent tariff on goods from the European Union. These protectionist measures have contributed to market uncertainty.
3. Heavy Selling by Foreign Institutional Investors (FIIs)
Foreign Institutional Investors (FIIs) have been aggressively withdrawing their investments in the past few weeks. In February, FIIs sold shares worth Rs 46,000 crore, while in January, they offloaded Rs 1.33 lakh crore worth of stocks. This sharp selling is adding pressure on the rupee, which is now expected to depreciate further.
4. Sharp Decline in the IT Sector
The IT sector was the worst hit in today’s market crash. Indian IT stocks were affected by a steep decline in US tech stocks, including Nvidia. As a result, the Indian IT sector recorded a 4 percent drop, with major companies like Tech Mahindra, Mphasis, and Persistent Systems witnessing sharp declines. With expectations of further losses in the US stock market, Indian IT firms could see more pressure ahead.
5. Uncertainty Over India’s GDP Report
Indian investors are eagerly waiting for the third-quarter GDP report, creating uncertainty in the market. Economists predict that India’s GDP growth rate for October-December 2024 will be around 6.3 percent, whereas the Reserve Bank of India (RBI) had estimated 6.8 percent. The slightly lower-than-expected GDP figure has added to investor concerns.
