Investors become poorer by ₹13 lakh crore in two days of market crash

Sensex plunges to four-month low on heavy selling, inflation surge, and foreign fund outflows impacting investor sentiment.

Equity investors suffered an erosion of Rs 13 lakh crore in market valuation in two days of crash in the BSE benchmark Sensex which lost over 2 per cent during this period.

Retail inflation soaring to a 14-month high of 6.21 per cent in October, unabated foreign fund outflows and muted quarterly earnings are the major reasons behind the heavy correction in the markets, traders said.

The BSE benchmark tanked 1,805.2 points or 2.27 per cent in two days. On Wednesday, it slumped 984.23 points or 1.25 per cent to settle at 77,690.95.

The market capitalisation of BSE-listed companies eroded by Rs 13,07,898.47 crore to Rs 4,29,46,189.52 crore (USD 5.09 trillion) in two days.

Retail inflation breached the Reserve Bank’s upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices.

“With inflation once again rising sharply and breaching above the RBI’s comfort level, receding hopes of any major rate cuts in the near future by the central bank put the markets into a tizzy.

“Also, relentless FII selling in local equities, along with rising US bond yields and dismal corporate earnings show has prompted overseas investors to park their funds in relatively cheaper markets like China,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, said.