Mumbai: RBI repo rate cut, liquidity support of about Rs 1.5 lakh crore to banks and neutral stance were all the reasons why the stock market was expected to rise on Monday, but the market crashed. Blowing the sentiments of the common people into dust, the stock market dived and investors lost around Rs 7 lakh crore. The BSE Sensex plunged 609.68 points to settle at 85,102.69. At the same time, the Nifty showed a decline of more than 225.90 points to 25,960.55.
If you believe the experts, the sentiment has become very bad due to the fall in IndiGo’s shares. On the other hand, the US Federal Reserve is scheduled to meet next week. The Fed is expected to announce a reduction of 25 basis points, but the central banks of other countries of the world may press the pause button on the interest rates. In such a situation, investors are taking a very cautious stance. Apart from this, the fall in the Rupee and the rise in crude oil prices are also the main reasons for the fall in the stock market.
Why did the Stock Market crash today?
Indigo spoils sentiment
IndiGo crisis is not over yet. The government has sent notice to the airline. If the airline fails to respond and take action, a big action can be taken against it. Also, IndiGo flight cancellation is continuing. Following which the airline stock IndiGo stock settled with 8.62 per cent loss at Rs 4,907.50.
Caution before US Fed meeting
Investors are taking a very cautious stance before the two-day Fed meeting, which begins on 9 December. HDFC Securities Prime Research Head Dayash Vakil said that investors are being vigilant before the forthcoming FOMC meeting, the release of additional inflation and the year-end portfolio adjustment. He further said that the central banks of Australia, Brazil, Canada and Switzerland are also scheduled to meet this week, although no central bank outside the Fed is going to make policy changes.
Selling of foreign investors
Foreign institutional investors continued their sell-off and sold shares worth Rs 438.90 crore on Friday — this was the seventh consecutive session of net withdrawals. By the way, in the month of December, foreign investors have withdrawn more than Rs 11,000 crore.
Fall in Rupee
Due to high crude oil prices and continuous withdrawal of foreign funds, the Rupee weakened 16 paise against the US dollar to 90.11 in the initial trade. According to foreign exchange dealers, the local currency opened at 90.07, but it declined further due to strong dollar demand from corporates, importers and foreign portfolio investors.
Rise in crude oil
Brent crude oil of Gulf countries rose 0.13 percent to 63.83 dollars per barrel in the international market. High crude oil prices put pressure on India’s import bill and fuel inflation concerns, which often creates an atmosphere of caution in the stock market.
Stock Market investors lost Rs 7 lakh crore
Investors have also suffered huge losses due to this fall in the stock market. Investors’ losses depend on the market cap of BSE. If you look at the data, when the stock market closed on Friday, the market cap of BSE was 4,70,96,826.75 crore which fell to Rs 4,63,94,500 crore on Monday.
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