As North Korea’s and the US continue to up the war rhetoric, Indian investors have lost nearly $100 billion (Rs 6.4 lakh crore) in just four trading sessions. The Bombay Stock Exchange’s market capitalisation has crashed to Rs 133.1 lakh crore.
According to a Reuters report, on August 7, BSE’s market cap had closed at Rs 139.5 lakh crore, an all-time high. In its northward journey, Dalal Street had taken 23 trading sessions to reach Rs 139.5 lakh crore market cap from Rs 133 lakh crore on July 6.
Across the globe, the dent in investors’ wealth was more than $1 trillion in the current week, a Reuters report said.
On Friday, the sensex lost another 1%, or 318 points to close at 31,214, a two-month closing low while the nifty lost 1.1%, or 109 points at 9,711 points. During the week, the sensex lost about 1,100 points, or 3.4%. The Doklam standoff between India and China, Sebi’s decision to suspend trading in 331 shell companies from Tuesday morning and weak corporate earnings also affected market sentiment during the week, dealers said.
The slide in the India market came on the back of a sell-off across the globe.
On Thursday night the Dow Jone Index in the US closed nearly 1% lower and S&P 500 index lost 1.45% while in Europe, FTSE in UK lost 1.5%. In early trades on Friday, while US markets were flat, the UK market was deep in the red.
Market players across the globe, however, are nearly clueless about the probable risks in case a war breaks out between the US and North Korea. A note to investors by Aditya Birla Money quoted Timothy Ash, a senior strategist from London, saying it was “hard to price a potentially ‘extinction event’ like a nuclear war”.
Friday’s slide was mainly because of strong selling in Reliance, SBI and L&T while stocks like Infosys, Dr Reddy’s and Axis Bank cushioned the fall partially.
A section of the market believes that the current correction is healthy for the market and is not over yet. “The current meltdown is more than welcome,” said Arun Kejriwal, director, KRIS, an investment advisory firm. “Since it has brought down the gap between the richly valued stocks and the fairly valued ones by a few notches. It’s not enough yet. However, there’s a possibility of a short-term bounce-back during the later half of next week,” he said.
Inputs From TNN and Reuters