Sensex plunges 850 points as investors lose ₹5 lakh crore: What is dragging down India’s stock markets?

It was a rough day on Dalal Street. The Sensex took a sharp hit, tumbling by around 850 points, that’s nearly a 1% drop, in just the opening hour. As of 3:30 PM, the Sensex stood at 823 points, easing slightly. However, investors saw about ₹5 lakh crore vanish from the total market value. The Nifty50 also slipped below the 24,900 mark, reflecting a market shaken by both global tensions and domestic worries.

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Investor Wealth Takes a Hit Again

By mid-morning, the combined market value of all BSE listed companies fell from ₹430 lakh crore to ₹425 lakh crore. That’s ₹5 lakh crore wiped out in minutes. And it’s not a one-off; over the last four trading sessions, total losses have ballooned to nearly ₹17 lakh crore.

What’s Going Wrong Globally?

The world isn’t helping much. Tensions in the Middle East have caused investors to become nervous, leading to sell-offs around the world. Add to that fresh U.S. tariffs rolled out by former President Trump, and fears of another trade war are back on the table, not great news for export-heavy markets like India.

Markets in Asia and the U.S. also ended lower recently, further dragging sentiment down. Additionally, oil prices are rising again, with Brent crude spiking, which could push up costs in India and lead to concerns about inflation.

The rupee’s slide isn’t helping either. It hit new lows between ₹86 and ₹ 87 against the U.S. dollar, which tends to scare off foreign investors.

Domestic Troubles Aren’t Helping

It’s not just the global picture. Foreign investors are pulling out in large numbers. Just this month alone, FPIs (Foreign Portfolio Investors) have sold equities worth between ₹20,000 crore and ₹37,000 crore. Since October 2024? A staggering ₹2.7 lakh crore has flown out.

Q4 earnings from Indian companies also failed to impress; the results were mixed and did little to lift investor confidence. And with the Reserve Bank of India’s policy announcement on the horizon, markets are playing it safe. Some experts say rate cut hopes may already be “priced in.”

Which Sectors Got Hit the Hardest?

Tech sector stocks led the fall, primarily due to global trade uncertainty. Shares of the Adani Group also nosedived, with some dropping as much as 20% after new bribery allegations surfaced in the U.S. Banking, metals, and energy stocks saw significant sell-offs, dragged down by a weak rupee and fluctuating commodity prices.

What Are the Experts Saying?

One analyst pointed to a strong dollar, fear of trade wars, and relentless foreign portfolio investment (FPI) selling as key reasons behind the crash. WealthMills’ Kranthi Bathini added that many investors are now booking profits after a prolonged rally, especially with global risks intensifying.

What’s Next?

In the short term, expect some turbulence. With ongoing geopolitical tension, the U.S. Fed’s next moves, and oil price volatility in play, things may stay choppy. Back home, the upcoming Union Budget and RBI decisions will be crucial.

That said, some investors are seeing a silver lining. The current dip might be a good entry point for high-quality, large-cap stocks that are now trading at more reasonable prices. As Dr. Vijayakumar put it, unless we see stronger data, such as better GDP numbers or solid earnings, markets are likely to swing back and forth within a range.

Bottom line? Today’s 850-point drop is the result of a perfect storm, global jitters, domestic unease, and investor nerves. Volatility’s here for now, but for those thinking long-term, this might be a buying opportunity in disguise.