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Stock markets experienced a severe downturn on Monday, with the BSE Sensex plummeting nearly 3% due to widespread selling in sectors such as banking, IT, metal, and oil & gas.

 

This sharp decline led to a staggering loss of over Rs 15 lakh crore for investors in just one day, marking a significant financial hit.

 

The 30-share BSE Sensex dropped 2,222.55 points, or 2.74%, closing at 78,759.40, its lowest in over a month.

 

The intraday figures were even more alarming, with the index falling by 2,686.09 points or 3.31%, touching 78,295.86. This was the worst single-day drop since June 4, 2024.

 

The NSE Nifty mirrored this downturn, plummeting 662.10 points, or 2.68%, to settle at 24,055.60, also marking a monthly low.

 

During the day, the Nifty fell by 824 points, or 3.33%, to 23,893.70, experiencing its steepest single-day decline since June 4, 2024, when markets reacted sharply to general election results.

 

Friday's session had already seen a decline of over 1% for both indices. In the span of just two sessions, the key indices have corrected by nearly 4%, leading to significant investor losses.

 

Investor wealth took a massive hit, with the total market valuation of BSE-listed companies dropping to Rs 441.84 lakh crore on Monday.

 

The cumulative loss for investors reached Rs 15 lakh crore, following a Rs 4.46 lakh crore loss on Friday, bringing the two-day total to over Rs 19 lakh crore.

 

The broader market also suffered, with the BSE smallcap gauge declining by 4.21% and the midcap index by 3.60%.

 

The global context contributed significantly to this market turmoil. An over 12% plunge in Japan's Nikkei, along with rising geopolitical tensions in the Middle East, dampened market sentiment.

 

Asian markets, including Seoul, Tokyo, Shanghai, and Hong Kong, closed sharply lower.

 

Japan's Nikkei benchmark saw a historic drop of 12.4% on Monday, following a 5.8% decline on Friday.

 

This compounded the global market rout, driven by fears that the US economy might be heading towards a recession. The Nikkei closed down 4,451.28 points at 31,458.42, marking its worst two-day decline ever.

 

Historical comparisons recall its worst single-day drop on October 19, 1987, when it fell by 14.9%, a day known as "Black Monday."

 

European markets also traded with significant losses, and US markets ended substantially lower on Friday, further influencing the bearish sentiment.

 

Within the Sensex pack, Tata Motors led the decline with a fall of over 7%. Other notable laggards included Adani Ports, Tata Steel, SBI, Power Grid, JSW Steel, and Maruti. Conversely, Hindustan Unilever and Nestle managed to end in positive territory.

 

Vinod Nair, Head of Research at Geojit Financial Services, commented on the situation, stating, "The global markets were jolted into a cautious mode by recessionary fears in the US following disappointing job statistics and the unwinding of carry trade following the rapid rise of the yen. The effects were felt by the domestic market as well and are expected to impact in the near term."

 

Foreign institutional investors (FIIs) were net sellers on Friday, offloading equities worth Rs 3,310 crore, according to exchange data.

 

Santosh Meena, Head of Research at Swastika Investmart Ltd., noted, "The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the US after extremely poor jobs data, which spooked market sentiment."

 

All sectoral indices ended lower, with the services index plummeting 4.56%, utilities falling 4.30%, realty declining 4.25%, capital goods dropping 4.13%, industrials down by 4.08%, power decreasing by 3.91%, oil & gas falling by 3.88%, and commodities declining by 3.82%.

 

Deepak Jasani, Head of Retail Research at HDFC Securities, explained, "Nifty fell more than 2.6% driven by global sell-off post signs of US recession setting in and rise in interest rates in Japan. A disappointing job scenario in the US coupled with the fear of a reverse Yen carry trade, following an interest rate hike in Japan, led Asian markets to plunge on Monday with Nikkei falling more than 12%."

 

He added, "European stocks fell, extending last week’s decline amid a deepening global rout in equities and a rotation away from the technology shares that have powered this year’s rally."

 

Vikas V. Gupta, CEO & Chief Investment Strategist at OmniScience Capital, highlighted the broader implications, stating, "The Bank of Japan’s rate hike has significantly impacted global markets, causing market participants to reconsider the financial landscape. Additionally, renewed speculation about a long-anticipated US recession has emerged, partly due to a slightly higher-than-expected unemployment rate."

 

The trading data from BSE revealed that out of 3,414 stocks, 664 advanced while 111 remained unchanged.

 

In commodities, global oil benchmark Brent crude declined by 1.93% to USD 75.33 a barrel.