12 Lakh Crores Gone In A Day: Crude Shockwaves Drive Markets Bloodbath

Indian equity investors lost about Rs 12 lakh crore today after a massive crash in the markets. Both Sensex and Nifty have plunged 3.3% since yesterday's close, rattled by a sharp sell-off as rising crude prices due to the Middle East war dampened investor sentiment after an uptick for three consecutive days. The Brent crude shot off to $100 per barrel as Iran struck key energy facilities in the Gulf. Weak global trends also weighed on markets, as foreign fund outflow continued unabated.

The Bloodbath

The 30-share Sensex crashed about 2,496 points to settle at 74,207 points, while the 50-stock Nifty tanked 775 points to 23,002, just above the 23,000-psychological benchmark. The crash wiped out Rs 12 lakh crore from the total valuation of the companies listed on the Bombay Stock Exchange (BSE), declining from Rs 439 lakh crore (yesterday) to Rs 427 lakh crore.

In the BSE pack, all 30 stocks were in the red, with losses led by Eternal (5.65%), Bajaj Finance (5.42%), Mahindra & Mahindra (5.25%), HDFC Bank (5.13%), and Larsen Toubro (4.72%). In the Nifty pack, ONGC was the only gainer among 50 stocks, while Shriram Finance (6.71%) was the biggest laggard.

Read: Investors Lose Rs 7,60,00,00,00,000 In An Hour: Why Stock Markets Crashed Today

The Oil Factor

The markets stare at uncertainty as there appears to be no end to the Middle East tensions. Rather, risks emerge to grow as the Strait of Hormuz, which handles one-fifth of the world's oil flow, remains closed and Iran threatens strikes if any tankers dare to cross the strategic maritime chokepoint.

Already under pressure, global oil benchmark Brent crude jumped to $111.4 per barrel today, as critical energy infrastructure in Iran and Qatar came under fresh attacks. Fearing that such high oil prices could impact earnings and trigger inflation, the markets took a hit.

Analysts suggest the sharp rise in crude prices has weakened market sentiments. The increasing Middle East tensions and the attacks on energy infrastructure have escalated supply concerns, according to Ponmudi R, CEO of Enrich Money.

Banking stocks dragged amid weak market sentiments, with HDFC Bank falling 5.13% to Rs 799.60. Among other major banks in the Sensex pack, Axis Bank lost 3.69%, ICICI Bank 3.04%, SBI (1.92%), and Kotak Bank (1.98%).

Read: All About Brent Crude And Why This Benchmark Dictates Global Oil Prices

Foreign Fund Outflows

Continued foreign fund outflows also dragged the markets amid an aggressive sell-off by foreign portfolio investors (FPIs). Data showed that the FPIs have pulled out money worth Rs 77,214 crore in just 12 trading sessions this month.

The US Fed decision to keep interest rates unchanged also made US bond rates more attractive, indicating a continued sell-off in the emerging markets like India in the near term. Weak global cues also kept the sentiments in the fear zone, as markets across Asia, like Japan, Hong Kong, and South Korea, remained in the negative.