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Indian markets were hit hard on Thursday as escalating geopolitical tensions in the Middle East led to a sharp decline in equity indices, wiping out Rs 10 lakh crore in market capitalization.
The benchmark BSE Sensex nosedived 1,769 points (2.10%), closing at 82,497, while the Nifty 50 plunged 546 points (2.12%) to 25,250. This broad sell-off led to significant losses across sectors, with nearly 2,864 stocks ending in the red compared to just 1,120 gaining stocks.
The fallout from the day’s trading session saw the combined market value of all listed companies on the Bombay Stock Exchange (BSE) plummet by Rs 10 lakh crore, dropping to a total of Rs 465 lakh crore.
Broader Market Impact
The rout was not limited to blue-chip stocks, as midcap and smallcap segments also suffered steep losses. The Nifty Midcap 100 index fell by 1,333 points (2.21%) to 59,024, while the Nifty Smallcap index dropped 378 points (1.96%) to 18,952, indicating widespread bearish sentiment.
Sector-wise, almost all major NSE indices were deeply in the red, with Auto, Financial Services, IT, FMCG, Realty, Energy, Private Banks, and Infrastructure taking the hardest hits.
Top losers on the Sensex included L&T, Axis Bank, Tata Motors, Reliance, Maruti Suzuki, Bajaj Finance, Wipro, and Kotak Mahindra Bank. JSW Steel was the only stock to buck the trend, ending in the green.
Geopolitical Tensions and Domestic Factors
According to market analysts, the sharp downturn was primarily driven by the escalating conflict in the Middle East, particularly following Iran’s ballistic missile attacks on Israel. Fears of an intensifying conflict could potentially push up global oil prices, raising inflationary concerns.
Additionally, domestic factors played a role. New SEBI regulations in the Futures and Options (F&O) segment created uncertainty, leading to concerns over reduced trading volumes and liquidity. With foreign institutional investors (FIIs) also shifting their focus to more attractively valued markets such as China, the pressure on Indian stocks increased.
On October 1, FIIs sold equities worth Rs 5,579 crore, while domestic institutional investors (DIIs) purchased Rs 4,609 crore worth of equities, offering some support to the market.
Future Scenario
Market experts warn of further volatility in the coming days. The escalating Middle East conflict could cause oil prices to rise further, adding to inflationary pressures that could weigh on the Indian economy. At the same time, domestic factors, including SEBI regulations and foreign fund outflows, will continue to impact market sentiment.
With global geopolitical and economic uncertainties mounting, investors are bracing for a turbulent period in the markets.
