A sharp sell-off was witnessed on Dalal Street on Thursday, March 19. The benchmark indices broke their consecutive winning streak. The Sensex declined by over 2,000 points, or almost 3 per cent. It fell to a low of 74,685. The Nifty 50 declined by 600 points to 23,180.95. The broader markets were not spared either. The mid and small-cap markets declined by almost 2 per cent.
The sharp decline on Dalal Street wiped out more than ₹9 lakh crore in investor wealth. The total market capitalisation of all listed companies on the BSE fell to ₹430 lakh crore.
Why did the market crash today?
Geopolitical tensions weigh on sentiment
Escalating Tensions between Iran and US Create Jitters in Stock Markets across the Globe. The ongoing conflict between Iran and the United States started on February 28. It is escalating with both sides targeting each other’s energy infrastructure. There are reports of strikes on critical energy facilities. There are warnings from Iran’s leadership.
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Surge in crude oil prices
Crude oil prices have risen significantly, with Brent crude trading above $110 a barrel. This has resulted in concerns over inflation and its implications for economic growth. Rising oil prices rising further are a major concern for India, as they may increase the trade deficit and negatively impact corporate earnings.
HDFC Bank triggers domestic concerns
Developments surrounding HDFC Bank have resulted in volatility. The resignation of the bank's chairman, Atanu Chakraborty, due to concerns over certain practices, resulted in a sharp response to the stock. The bank's shares declined by over 8 per cent and touched a 52-week low.
US Fed signals caution
The US Federal Reserve's policy response has also impacted the markets. Interest rates were maintained, but the Fed's policy statement reflects a difficult environment due to geopolitical risks and a slight increase in inflation. This has resulted in the weakening of the expectation of rate cuts.
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Rupee hits record low
The Indian rupee has touched a record low of 92.89 against the dollar, as per reports from PTI. A weakening currency generally leads to the flow of foreign capital, which harms stocks.
Broader global cues
Weak markets across the globe have also put pressure on the markets. The Asian markets have slipped after the overnight decline on the US markets. Selling of stocks by foreign institutional investors, coupled with rising crude oil prices and a weakening rupee, has resulted in the decline.
Together, these factors created a perfect storm, leading to one of the sharpest declines in recent sessions.
