Third Consecutive Nifty 50 (₹) Drop Leads to Massive ₹5 Lakh Crore Loss for Investors

• Indian stock market benchmarks, the Nifty 50 and the Sensex, ended in the red on Tuesday, May 7, despite positive global cues.
• Major Asian and European markets recorded gains on Tuesday amid renewed hopes of rate cuts by the US Fed.
• Investors remained in the selloff mode in the Indian stock market amid persisting concerns over the premium valuation of the market in the absence of fresh triggers.

Indian stock market benchmarks, the Nifty 50 and the Sensex, ended in the red on Tuesday, May 7, despite positive global cues. This article explores the reasons behind this downturn and its impact on investors.

Global Market Performance

Major Asian and European markets recorded gains on Tuesday amid renewed hopes of rate cuts by the US Fed, following recent data indicating a cooling off in the US labour market. Japan’s Nikkei rose 1.54 per cent while Korea’s KOSPI jumped 2.11 per cent. China’s Shanghai Composite Index rose 0.22 per cent. Among the European peers, the UK’s FTSE rose by over a per cent while Germany’s DAX rose by about a per cent when the Sensex closed.

Indian Market Performance

Despite the positive global cues, investors remained in the selloff mode in the Indian stock market amid persisting concerns over the premium valuation of the market in the absence of fresh triggers. Heavy selling by foreign portfolio investors (FPIs) ahead of the Lok Sabha election outcome on June 4 is seen as one of the top reasons behind the recent downturn in the Indian stock market. Sensex closed with a loss of 384 points, or 0.52 per cent, at 73,511.85. Shares of ICICI Bank, HDFC Bank, Reliance Industries and Power Grid ended as the top drags on the index.

Impact on Investors

The Nifty 50 closed 140 points, or 0.62 per cent, lower at 22,302.50 with 34 stocks in the red. It was the third consecutive session of losses for the Nifty 50 index. The midcap and smallcap segments suffered deep cuts. The BSE Midcap index plunged 1.90 per cent while the Smallcap index ended with a loss of 1.65 per cent. The overall market capitalisation of BSE-listed firms dropped to nearly ₹398.4 lakh crore from ₹403.4 lakh crore in the previous session, making investors lose nearly ₹5 lakh crore in a single session.

Conclusion

While global markets are showing positive signs, the Indian stock market is experiencing a downturn due to various factors. This includes heavy selling by foreign portfolio investors ahead of the Lok Sabha election outcome and concerns over the premium valuation of the market. As a result, investors are advised to exercise caution and stay informed about market trends.