Investors in the equity market are experiencing a gloomy start to the festive season, with losses amounting to nearly Rs 15 lakh crore over the past five sessions. This decline is occurring in the backdrop of a sustained period of sell-offs coinciding with the Israel-Hamas conflict. Additionally, the market is grappling with pressure stemming from rising bond yields and mixed corporate earnings reports.
During these five sessions, the BSE Sensex has seen a drop of 2,326 points, equivalent to 3.50%, while the Nifty50 has fallen by 670 points, which is about 3.39% during the same period. In the latest session, the 50-share Nifty closed at 19,122 after falling 159.60 points, while the Sensex plummeted by 522.82 points to reach 64,049. This market downturn has resulted in a reduction in the market capitalization of BSE-listed firms. Over these five sessions, it has fallen from Rs 323.82 lakh crore to Rs 309.08 lakh crore, marking a loss of Rs 14.74 lakh crore.
On Wednesday, there was a slight reduction in crude oil prices, as well as in the yields of 10-year US treasuries, which had surpassed the 5% mark earlier in the week for the first time since 2007. When bond yields rise, investors often shift their focus from riskier assets, such as equities, to bonds. Foreign Institutional Investors (FIIs) also sold a net total of Rs 4,237 crore on Wednesday. Some experts suggest that the prevailing global challenges are prompting investors to reduce their exposure to the relatively expensive Indian market. The Nifty50, with a trailing 12-month price-to-earnings (P/E) multiple of 22.22 as of October 23, is one of the pricier equity benchmarks worldwide. Additionally, the earnings reports for India Inc. in the September quarter, particularly for IT heavyweights, have failed to elicit optimism in the market, contributing to the subdued sentiment. The domestic market is currently undergoing a correction, and even the broader market segments that had previously performed well are witnessing profit-taking. Over the past two sessions, the mid-cap and small-cap indexes have registered declines of around 3-4%.
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