Sensex, Nifty drop over 1%: Investors lose Rs 4 lakh crore

Investors have lost close to Rs 4 lakh crore in the last two trading sessions alone; the total wealth eroded since September is now Rs 22.3 lakh crore.

On Friday, the Sensex shed 463.95 points, or 1.3%, to close the session at 34,315.63 while the broader Nifty 50 pared 149.5 points, or 1.4%, to end at 10,303.55. With Friday’s fall, the Nifty 50 has come off more than 12% from its August highs.

The benchmark indices continued to decline after the H-1B visa scare that hit software stocks badly. Moreover, Reliance Industries (RIL) lost value after it posted a lower-than-expected refining margin for the quarter ended September 2018.

Software and energy stocks led the fall on Friday with the Nifty IT index registering its biggest single-day drop since February 2017. While the gauge for IT stocks settled at 14,476.85 points, down 3.2%, Nifty Energy declined 2.7% to 14,014.05 points.

Foreign portfolio investors (FPIs) continue to sell Indian equities apprehensive that earnings quality will be poor.

Since April, overseas investors have pulled out Indian equities worth $4.13 billion selling in every month barring July. In october so far, they have offloaded stocks worth $2.5 billion. However, domestic institutions have been buyers to the tune of $10.5 billion.

The market value of BSE-listed companies stood at Rs 137.04 lakh crore on Friday. Weak trends in global markets and persistent sell-off in non-banking finance companies (NBFCs) also weighed on investor sentiments.

Despite reporting a record profit of Rs 9,516 crore in Q2FY19, shares of RIL plunged as much as 6.6% in the intra-day trade as its gross refining margin (GRM) slid to a three-and-a-half-year low of $9.50 per barrel. RIL along with five software firms account nearly a quarter of Nifty’s weightage.

Among the Nifty IT constituents, MindTree plummeted as much as 16.8% – its biggest drop since listing – after brokerages cut target price on a cautious macro outlook particularly in the UK market.

The overall breadth of the market was sharply negative on Friday, with 531 gainers against 1,214 decliners on the NSE. On the BSE, 1,722 stocks ended in the red against 867 stocks closing higher.

The weak sentiment saw much of the market give up value as more than half of the companies with a market capitalisation of `1,000 crore have lost over 20% of their value since January 1, investors have had very little to cheer. Of the 733 companies in this universe, 293 have lost more than 30% of their value during the same period.

The Nifty MidCap Index has given up close to 22% since the start of the year, and 79% of its constituents have lost value. The Nifty Small Cap Index has suffered a bruising 34.1% since January, and 90% of its members have seen a fall in prices.