Stock market crash today: BSE Sensex ends over 900 points down; Nifty50 dips below 22,000 – top reasons for bear attack | India Business News – Times of India


Stock market today: BSE Sensex and Nifty50, the Indian benchmark stock indices, tanked over in trade on Wednesday. BSE Sensex, India’s benchmark stock index, experienced a significant drop of 1,100 points, falling below the 73,000 level. The Nifty, another key index, also saw a decline below the 22,000 mark.
BSE Sensex closed the day at 72,761.89, down over 900 points or 1.23%. Nifty50 ended the trading day at 21,997.70, down over 330 points or 1.51%. The real impact was felt in the smaller stocks segment of the market. The smallcap index recorded a 5% decline, marking its worst single-day fall since December 2022. Midcaps also lost 4%, while microcaps and SME stock indices saw a drop of around 6% each. This pause in the stellar rally of the broader market is raising concerns.
The market capitalisation of all BSE-listed stocks plummeted by Rs 14 lakh crore to Rs 372 lakh crore, according to an ET report.
For months now, the excessive valuations in the smallcap segment, driven by the irrational exuberance of retail investors, have been a cause for concern. Dr V K Vijayakumar of Geojit Financial Services expressed worry over this issue.
The sell-off had a widespread impact across sectors. The auto index fell about 3%, PSU bank dropped by 4%, while realty and oil and gas sectors witnessed a 5% decline. The pharma sector also experienced a 2% decrease. Nifty Bank lost over 300 points.
However, a 4% rally in ITC shares following BAT’s stake sale helped the Nifty FMCG index remain flat.
The fall in the Sensex, Nifty, and smallcaps can be attributed to several key factors:
1) Sebi stress test: Sebi chairperson Madhabi Puri Buch has sent out a strong message after concerns over froth building up in certain parts of the market. She mentioned that there are pockets of froth or even a bubble, and it is not appropriate to allow it to keep building. This led to ICICI Prudential Mutual Fund temporarily suspending fresh subscriptions via lumpsum mode to smallcap and midcap funds. Analysts interpret this move as an indication of excessive valuations in the broader market.
2) Valuations: Some top brokerages and veteran investors have been warning about the unsustainable valuations in the smallcap space. Buch’s statement about valuation parameters being off the charts and not backed by fundamentals has resonated with market participants. However, Vinod Nair of Geojit Financial Services believes that, other than the premium valuation, there are no fundamental issues that would affect the long-term growth of domestic midcaps.
3) Mahadev betting app case: The Enforcement Directorate’s investigation into the Mahadev Online Book illegal betting app scam has revealed a link to the stock market bubble. Shares worth Rs 1,100 crore held in demat accounts linked to alleged hawala operator Hari Shankar Tibrewala have been frozen. Tibrewala and his entities held stakes in more than 30 listed stocks, many of which have seen a downward spiral since the ED action.
4) Leverage cut: In response to Sebi’s warning, stock brokers have started asking traders to liquidate their leveraged bets in mid and smallcaps. This has contributed to the ongoing sell-off in recent days. Brokers are advising clients to cut their stock positions built on loans, especially ahead of the financial year-end on March 31.
5) Profit booking and loss harvesting: As the financial year comes to a close in a few weeks, investors are making adjustments to their portfolios for tax purposes. This includes profit booking and loss harvesting, which are common practices during March.
6) Technicals: On Tuesday, the Nifty formed a long-legged Doji candle but failed to negate the bearish evening star pattern from the previous session. The derivatives market also showed bearish sentiments, with sectors witnessing short build-up or long unwinding.
Despite a record high in the S&P500 and foreign institutional investors buying Indian stocks, the current market decline seems to be more domestic in nature. The concerns over excessive valuations, stress tests, the Mahadev betting app case, leverage cuts, profit booking, and technical factors have all contributed to the downward trend in the Sensex, Nifty, and smallcaps.

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