Investors lose Rs 11.37 lakh crore as Sensex, Nifty fall 1.5%

Benchmark indices suffered a sharp sell-off on Thursday, with the Sensex plunging more than 1,000 points and the Nifty falling 1.6% as investors continued to digest the Reserve Bank of India's tighter policy stance. Rising crude oil prices, persistent foreign selling, a weaker rupee and broad-based selling across sectors added to the pressure.The Sensex ended at 71,593.24, down 1,045.46 points or 1.44%. The index opened at 72,668.00 and touched an intraday low of 71,327.75.The Nifty 50 closed at 22,231.80, down 371.25 points or 1.64%. It opened at 22,599.05 and fell to an intraday low of 22,179.90.The sharp fall wiped out around Rs 11.37 lakh crore in market capitalisation of BSE-listed companies during the day. The total market capitalisation fell from Rs 4,72,35,273.39 crore at the start of trade to Rs 4,60,97,838.63 crore at the end.RBI'S TIGHTER STANCE CONTINUES TO WEIGHThe market remained under pressure a day after the RBI raised the repo rate by 25 basis points to 5.50% and shifted its stance from “neutral” to “calibrated tightening”.The change in stance has raised expectations of further rate hikes, putting pressure on equity valuations and rate-sensitive sectors.Vinod Nair, Head of Research, Geojit Investments Limited, said the RBI's tighter stance was resetting near-term valuations.“The domestic market continued on its sharp sell-off mode as the ripple effects of hawkish RBI policy weighed on rate-sensitive sectors, effectively resetting near-term valuation multiples,” Nair said.He added that persistent FII outflows, higher bond yields and a weaker rupee had further amplified the pressure.CRUDE OIL JUMPS ABOVE $104Crude oil prices added to the market's concerns. Brent crude rose 4.25% to $104.46 a barrel, while WTI crude gained 4.15% to $91.94.The sharp rise in oil prices is particularly negative for India because higher crude can add to inflation, increase the import bill and put pressure on the rupee.Nair said volatile crude prices remaining above $100 continued to be a hurdle for the economy.“The favourable high-frequency data underscores a resilient domestic economy while the likelihood of additional rate hikes keeps equity valuations compressed,” he said.FII SELLING REMAINS A MAJOR DRAGForeign institutional investors continued to pull money out of Indian equities.FIIs sold Rs 6,121.37 crore in the cash market on Wednesday, according to the data provided. This followed selling of Rs 2,961.30 crore on Tuesday, Rs 4,699.14 crore on Monday and Rs 9,484.22 crore on October 1.FIIs have therefore remained persistent sellers even as domestic institutional investors continued to buy.DIIs bought Rs 4,596.57 crore on Wednesday and Rs 5,088.92 crore on Tuesday, providing some support to the market.However, the continued foreign selling has kept large-cap stocks under pressure.Nair said mid- and small-cap stocks also lagged as investors booked profits and remained cautious about margins.RUPEE NEAR RECORD LOWThe rupee ended almost flat at 96.78 against the US dollar, but remained close to its all-time low of 96.96 hit in May.The currency has remained under pressure from elevated crude prices, foreign fund outflows and higher global bond yields.A weaker rupee can further add to imported inflation when oil prices are rising, making the RBI's inflation challenge more difficult.BROAD-BASED SELLING HITS MARKETThe sell-off was broad-based, with almost every major sector ending in the red.The Nifty Metal index plunged 3.55%, Realty fell 3.16%, Healthcare declined 2.33%, Auto dropped 2.49% and Oil & Gas fell 2.52%.The Nifty FMCG index declined 2.02%, Pharma fell 2.32% and Media dropped 2.79%.Financial Services 25/50 fell 1.18%, while private banks declined 0.91% and PSU banks fell 1.15%.The broader market also suffered heavy losses. The Nifty 100 fell 1.82%, Nifty 200 declined 1.96% and Nifty 500 dropped 2.01%.The Nifty Midcap 50 fell 2.71%, Midcap 100 declined 2.53% and Smallcap 100 dropped 2.34%.India VIX jumped 10.26%, reflecting a sharp rise in market volatility.IT stocks were among the few pockets of relative strength.The Nifty IT index fell only 0.08%, with Tech Mahindra gaining 0.44%, Infosys rising 0.21% and Axis Bank gaining 0.25%. TCS ended 0.42% lower and HCLTech fell 0.26%.TCS remained in focus after announcing its September-quarter results, while investors continued to assess the outlook for India's IT sector.UPI MDR REPORTS HIT DIGITAL PAYMENT STOCKSDigital payment stocks also faced pressure amid reports that a decision on the proposed UPI merchant discount rate (MDR) framework could be delayed.The uncertainty weighed on stocks such as Paytm and MobiKwik as investors assessed the potential impact of UPI monetisation and the timing of any changes to the payment ecosystem.The development added another pocket of stock-specific pressure to an already weak market.The market now faces a combination of higher interest rates, elevated crude prices, persistent FII selling and currency pressure.At the same time, domestic economic indicators remain relatively resilient and the Q2 earnings season is now emerging as the next major trigger.Nair said investors would closely watch management commentary on demand and input costs during the earnings season.“Looking ahead, the market focus shifts to the Q2 earnings season, where management commentary on demand sustainability and input cost absorption will provide critical near-term direction,” he said.For now, however, the combination of RBI tightening, crude above $100, foreign selling and a weaker rupee has kept the market firmly in risk-off mode.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends