Stock Market Crash: Investors Lose Rs 3 Lakh Crore. Here Are Some Key Factors

In the global markets, S&P500 and Dow Jones both witnessed 2 per cent declines, while Asia Nikkei and Heng Seng experienced dip of 1.4 and 0.3 per cent, respectively

Dalal Street is witnessing an absolute mayhem for the past few days. However, things took an ugly turn on Wednesday when the two key equity benchmarks, Sensex and Nifty, tanked due to bearish sentiment. The domestic indices on Wednesday started trade on a weak note and dived lower tracking weak global cues. Both lost nearly 0.8 per cent each at 10.50 am with investors losing around Rs 3 lakh crore in wealth, according to a MoneyControl report. This year the Sensex and Nifty have both lost roughly 0.9 per cent and 2.14 per cent, respectively. 

In the global markets, S&P500 and Dow Jones both had 2 per cent declines, while Asia Nikkei and Heng Seng both experienced declines of 1.4 and 0.3 per cent, respectively, the report said. 

At 1.30 PM, the S&P BSE Sensex plunged 781 points to 59,892. On the other hand, the NSE Nifty50 was trading at 17,599, down 228 points.

From the release of recent macroeconomic data to new developments in Russia-Ukraine war, here are some major factors at play in share markets.  

• On Tuesday, Russian President Vladimir Putin announced the deployment of new strategic systems for combat service, suspended a key nuclear arms limitation treaty, and threatened to resume nuclear tests. Global markets may be impacted by the ongoing hostilities between Russia and Ukraine, particularly if Putin's attitude causes the conflict to worsen.


• On February 22, the US Feds will release its key policy meeting minutes. Market confidence has declined due to worries that the minutes will reveal US policymakers to be steadfastly hawkish. The meeting minutes may show how many members supported a greater hike and whether they believed that raising interest rates higher than initially projected would be necessary to combat inflation, the report said.


• This comes as discussions about the need for additional interest rate increases in the upcoming months have been sparked by the recent US producer price index's stronger-than-expected recovery in January. Investors are paying careful attention to the Fed's position on interest rates and inflation since it could have a big impact on the world economy.


• Investors are also closely watching the Reserve Bank of India's minutes of its February  MPC meeting for clues on the trajectory of rate hikes as they are scheduled to be released on the same day.


• According to the report, investors will also be watching for hints on prospective rate increases in the remarks made by RBI Deputy Governor Michal Patra at the first G20 Finance Ministers and Central Bank Governors meeting and the second G20 Finance and Central Bank Deputies Conference.


• From the beginning of the year, foreign investors have been offloading Indian stocks, with total transactions so far-reaching almost $3.37 billion. They sold Indian stocks valued at over $17.21 billion in 2022. There are indications that this tendency might be changing, though, since foreign investors started purchasing Indian stocks last week, the report said.


• In the third quarter of FY23, India Inc.'s profitability slowed down, and corporate earnings fell short of analysts' projections, the report said. Financials and automobiles performed very well, but the commodities sector underperformed. Broad-based consumption was slowing, which had an adverse effect on business earnings and was felt in both discretionary and staple expenditures.


• Analysts are still cautiously hopeful, though, and believe that the strong Rabi harvest and lowering CPI inflation will eventually increase demand for basic commodities. The report added that according to a Motilal Oswal Research analysis, 57 per cent of the businesses in their universe either met or exceeded profit projections, indicating a reasonable distribution of earnings across industries.