The BSE Sensex witnessed an atrocious fall to an intra-day low of 52,654 on May 13. Due to this drop, the market capitalization of 17 Gujarat-based companies suffered a straight ₹3.20 lakh crores erosion. Surprisingly, this happened in a mere fortnight since April 29.
Global inflation at the hands of the Russia-Ukraine War with a weak market has resulted in stock market indices falling consistently. Thus, since April 29, the market capitalization of BSE listed companies decreased by ₹20 lakh crores. Not only this, but the state’s leading firms also reported a decline.
Among the 17 companies that faced a drastic loss, the Adani Group saw a colossal sell-off. However, the state-owned PSUs noticed compaction in the market cap. Adani Green Energy suffered attrition of ₹1.29 lakh crores in market cap as its stock plunged around 27% in a fortnight.
Statistics say that on April 29, the BSE Sensex enumerated total market capitalization of companies was ₹266 lakh crores. Later, it reduced to ₹246 lakh crore on May 13. In April, FIIs sold inquiries worth ₹40,652 crores. According to experts, they have stayed net sellers since October 2021. In May, the Foreign Portfolio Investors (FPIs) also sold equities worth ₹23,000 crores from Indian Market.
“Currently, the global markets are facing inflation and pressure due to the increase in interest rate by the US Federal Reserves. As a result, the FIIs are selling from emerging markets. The RBI has also increased interest rates. On the other hand, India is witnessing high inflation as firm crude oil prices rise,” said Hitesh Somani, Senior Technical Analyst. “Without any doubt, the fundamentals of Gujarat-based companies are powerful. However, the selling pressure in the overall markets results in a stock correction by 30% against around 9% correction in NIFTY. Thus, the market cap has nosedived. In the past week, 30 stock-based Sensex has seen a 3.72% correction,” he added.
According to analysts, markets might continue to face heavy selling from higher levels. As investors book their gains in the market, it is going into the rising phase. However, until the NIFTY does not manage to sustain above the 17,400 level, the market will stay in the bear trap.