Hold One’s Stocks? Markets Crash, Rupee Hits An All-Time Low

Photo by Kelly Sikkema on Unsplash

Indian equities were off to a fatal start on Friday. There was more than one reason for investor sentiment to dwindle. 

The rupee touched a lifetime low of 78.28 to the dollar. Indian equity benchmark indices nosedived, recording their first weekly drop in four weeks. All in all, equity investors became poorer by nearly Rs.6 lakh Cr as Sensex plunged over 1,500 points amid a global selloff. What is it, if not a bloodbath?

Global Influencers

Indian shares fell sharply, and the rupee hit a record low. Who is to blame?

The US inflation data and a COVID-19 warning from Beijing roiled global markets are said to be responsible for this wipeout. Traders in Asia’s 3rd largest economy were waiting for May consumer price data for further cues. 

Meanwhile, the NSE Nifty 50 index slipped 2.5% at 15,785. Sell-offs intensified in the market amid dampening cues from global markets as investors fretted. 

Slippery Grounds

Another factor messing with investor sentiment has been the rising crude oil prices. While prices cooled on Friday because of fresh restrictions in Shanghai and Beijing, oil prices are still trading at 3-month high levels.

But all is not lost. Domestic investors have pumped in $3 for every $4 of foreign investor outflows in the last 8 months – they have proved what they can do by being shock absorbers, unlike FPIs (Foreign portfolio investors). 

A Worldwide Storm

The tremors were not just limited to India. Other Asian equity markets saw a huge sell-off on tensions over rising borrowing costs. Hong Kong witnessed the steepest fall of 3.39%, followed by Tokyo, which fell by 3.01%, and Taiwan by 2.36%.

Too long? Here’s a one-liner: The Indian equity market faced a major wipeout as Sensex crashed, all sectors went red, Rs.6 lakh Cr of investor wealth was wiped off, and foreign investors pulled out.

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