Virendra Pandit
New Delhi: Investors lost nearly Rs. 13.5 lakh crore on Wednesday in the blood bath in India’s stock market as Sensex crashed 906 points and Nifty slipped below the 22,000 mark.
As bears prowled on Dalal Street in Mumbai, hammering equities, the S&P BSE Sensex and Nifty50 index fell over one percent, and the broader indices witnessed a decline of up to five percent.
At the headline level, Sensex tumbled 1,152 points during the day, before ending 906 points, down at 72,762. The Nifty50 also breached the 22,000 level, hitting an intraday low of 21,906, and ending below 22,000 with a loss of 338 points.
In the broader markets, the BSE SmallCap index plunged 5.1 percent, and the BSE MidCap declined 4.5 percent. In three days, the BSE m-cap has plunged by Rs 20.69 trillion.
“Investors should focus on the sustained weakness in the broader market, particularly the small-cap segment. The excessive valuations in these segments, driven by the irrational exuberance of retail investors, have been a concern for many months now. But it has taken a strong message from the regulator SEBI to trigger a correction. Persistent selling, along with actions from mutual funds, indicates there is more pain ahead,” said VK Vijayakumar, chief investment strategist, Geojit Financial Services.
Market regulator Securities and Exchange Board of India (SEBI) has been scrutinizing flows into mid, and small-cap stocks amid a massive rally in the segment over the past few years.
On Monday, SEBI Chairperson Madhabi Puri Buch said there are pockets of froth in the market. “Some call it a bubble. It may not be appropriate to allow that bubble to keep growing because when it bursts, it impacts investors adversely.”
The regulator has observed signs of manipulation at both the trading and issuance levels in the small and midsize enterprise (SME) space.
On Tuesday, the National Stock Exchange Nifty Smallcap 100 Index slipped into ‘correction’ territory. A fall of 10 percent or more from a recent high is termed ‘correction’.
Declining close to 2 percent for a second day, the Nifty Smallcap 100 hit an intraday low of 15,011, shedding 1,681 points, or 10.1 percent, since logging an intraday peak of 16,692 on February 8. The index is still up 62 percent in the past year.
Besides, many investors booked profit in large caps as 25 of 30 Sensex stocks, and 43 of 50 Nifty stocks reeled under pressure on Wednesday.