Mumbai: Investor wealth on Thursday tumbled by over Rs 1 lakh crore due to a massive fall in the stock market, where the benchmark Sensex plunged 406.08 points.
The BSE benchmark Sensex closed at 20,229.05, down 406.08 points — its biggest fall since September 3 when it had lost 651.53 points. The broad-based NSE index Nifty ended 123.85 points down at at 5,999.05.
In-line with the weak broader market, the total investor wealth dipped by Rs 1.18 lakh crore to Rs 66,38,849 crore.
The markets were mirroring weakness in global equities as overseas investors turned net sellers of equities after minutes from the US Federal Reserve’s October policy meeting hinted about an early roll back of its massive bond buying programme.
The provisional data from stock exchanges showed that foreign institutional investors (FII) turned net sellers on Thursday offloading equities worth Rs 59.80 crore after pumping in over Rs 7,460 crore in November.
“It’s the short-term traders who are unwinding their dollar portfolio as the rupee had weakened against the US dollar on the speculation about US Federal Reserve cutting its stimulus,” said Deven Choksey, managing director, KR Choksey Securities.
Extending its fall for the second consecutive day, the partially convertible rupee closed at 62.93 per dollar as compared to its previous day’s close of 62.57 to the dollar.
“Foreigners have started offloading their positions, which is good for the markets as there won’t be a major crash when the Fed tapering actually happens,” pointed out Arun Kejriwal, director, Kejriwal Research and Investment Service.
With next week being the expiry of November derivative series, Kejriwal said that the markets would remain super volatile in the next few days.
The market breadth remained extremely weak with 1,569 stocks on the Bombay Stock Exchange closing deep in the red as compared to just 895 stocks that advanced.
All the BSE sectoral indices ended in the red with the BSE banking and capital goods indices leading the pack.
“We reiterate that, introduction of more fiscal reforms and effective implementation of the reforms are the prerequisites for the markets to sustain their current valuations and improve upon them.
While a potential liquidity withdrawal will impact developing markets, improved fundamentals may make foreign flows more sticky and lead to out performance by India” Dipen Shah, head of research, Kotak Securities.
