Sensex plunges, investors lose Rs 14 lakh crore – Times of India

by The Technical Blogs

MUMBAI: Wednesday was the worst day for Dalal Street investors since Covid in terms of wealth erosion. The day’s selloff erased Rs 13.9 lakh crore worth of investors’ wealth in terms of loss in BSE’s market capitalisation that was just a tad lower than the Rs 14.2 lakh crore, the biggest loss ever, recorded on March 23, 2020, days before the Modi govt imposed a lockdown to contain the spread of the Covid virus.
At close of session on Wednesday, BSE’s market cap was at Rs 378.7 lakh crore.

The day’s across-the-board selling pulled down sensex by 906 points, or 1.2%, to 72,762 with heavyweights like RIL, NTPC and L&T contributing the most to the fall. The nifty lost 338 points, or 1.5%, to close at 21,998. The crash in the two leading indices would’ve been worse had ITC not rallied to close 4.5% higher, BSE data showed.
Compared to the sell-off seen in blue chip stocks, small- and mid-cap stocks were hit harder. After the recent spate of warnings from the markets regulator Sebi about ‘froth’ building in these segments of the market, and its directive to fund houses to tighten their risk management measures in schemes investing in small- and mid-cap stocks, investors preferred to take some money off the table in these counters, market players said.
According to Vinod Nair, Head of Research, Geojit Financial Services, in contrast to the global uptrend, unfavourable risk-reward balance of mid and small-cap stocks in India, fuelled by prolonged premium valuations, aggravated Wednesday’s fall in leading indices. Other than the premium valuation of a large number of stocks, no fundamental issue was noticed that could have affected the northward movement of most indices and impact the long-term growth image of domestic midcaps, Nair said.
According to another market veteran, some investors preferred to book profit at these high levels in mid- and small-cap stocks ahead of Sebi’s scheduled stress-testing results for schemes in these segments of the fund industry. The markets regulator is set to announce the results of the first stress testing of mid- and small-cap funds on Friday.

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