Sensex falls down 1,500 points, investor wealth of Rs 6 lakh crore is wiped out in minutes

With the Sensex falling over 1,500 points today amid a global selloff, equity investors lost about 6 lakh crore. As US inflation data and a COVID-19 warning from Beijing roiled global markets, Indian shares tumbled significantly and the rupee hit a record low, with traders in Asia’s third-largest economy waiting for May consumer pricing data for fresh clues. In recent activity, the NSE Nifty 50 index was down 2.5 percent at 15,785.

The Federal Reserve’s policy decision is expected later this week. As a result of the US central bank’s strong rate hikes in May, economists forecast aggressive rate hikes in the coming months.

“The near-term market trend is weak. The May US inflation print at 8.6% against the market expectation of 8.3% is likely to turn the Fed more hawkish with a series of 50 bps rate hikes taking the terminal rate by mid-2023 above 3.5%. Such a scenario would be negative for risky assets like equity, particularly in the context of declining global growth,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“The Indian market will stabilize only when the US market stabilises. Therefore, investors may wait and watch till clarity emerges on the market trend. One silver lining is the 7.1% increase in IIP which indicates that the Indian economy is doing well. Therefore, long-term investors can use the dips in the market to buy high quality economy-facing stocks like capital goods, banking, telecom and export segments,” he added.

The rupee fell to a new low of 78.28 against the dollar today, while the benchmark 10-year bond yield rose to 7.60 percent, the highest level since February 2019.

The focus is now on India’s retail inflation statistics, which will be released later in the day. According to a Reuters survey, the consumer price index fell slightly in May, but remained considerably above the Reserve Bank of India’s upper tolerance range for the seventh month in a row.