Indian Stock Market Suffers Steep Decline, Wiping ₹3 Lakh Crore Off Investor Value

Indian Stock Market Sees Significant Selling Amid Global Uncertainties

On February 27, the Indian stock market witnessed a decline across segments, with the Sensex falling 600 points, or 0.80%, to an intraday low of 81,620, while the Nifty 50 dropped 200 points, or 0.90%, to 25,272.

The market capitalization of BSE-listed firms declined to ₹465 lakh crore, with investors losing ₹3 lakh crore from the previous session's value of ₹468.5 lakh crore.

Several factors contributed to the market selloff, including:

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Geopolitical Uncertainties

The absence of a fresh domestic trigger, coupled with ongoing US-Iran talks, has weighed on market sentiment. The US-Iran nuclear talks ended without a deal, leading to uncertainty over the next move of the US. US President Trump hinted at a military attack on Iran, reiterating that he would not allow Tehran to possess nuclear weapons.

Crude Oil Prices

Brent Crude continues to trade above $71 per barrel, amid persisting uncertainty over the US-Iran nuclear talks. Elevated crude oil prices can exert pressure on the domestic currency, trigger foreign capital outflow, and distort the country's fiscal maths.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Inconsistent Foreign Capital Flow

Foreign institutional investors (FIIs) have started buying Indian stocks in the cash segment, but continue booking profits due to elevated domestic market valuations and a weak rupee. On February 26, FIIs sold Indian stocks worth ₹3,466 crore in the cash segment.

Sectoral Profit Booking

Heavyweight sectors like banking, metal, auto, and FMCG witnessed strong profit booking after recent gains, pulling the benchmarks down. Experts highlight that the market is witnessing stock-specific action amid a lack of major domestic triggers.

Q3 GDP Print

The Q3 GDP print, set to be released on February 27, is expected to show healthy growth numbers, but the focus will be on nominal GDP, which has been weak of late, weighing on market sentiment. According to the State Bank of India (SBI), the Indian economy is likely to have expanded 8.0-8.1% in the December quarter.