Sensex Crashes Over 600 Points: Investors Lose ₹5 Lakh Crore – Why is the Indian Stock Market Falling?
Sensex Crashes : The Indian stock market witnessed a sharp decline on Monday, February 10, as the Sensex tumbled over 600 points and the Nifty 50 neared the 23,350 mark. This marked the fourth consecutive session of losses, leading to a massive erosion of investor wealth. The market downturn was widespread, with mid- and small-cap stocks taking an even bigger hit.
Market Performance at a Glance
| Index | Opening Level | Closing Level | Intraday Low | Change (%) |
|---|---|---|---|---|
| BSE Sensex | 77,789 | 77,189 | 77,189 | -0.86% |
| NSE Nifty 50 | 23,544 | 23,357.60 | 23,357.60 | -0.90% |
| BSE Midcap Index | – | – | – | -2% |
| BSE Smallcap Index | – | – | – | -2% |
By midday, the Sensex had recovered slightly but remained in negative territory, trading 512 points lower at 77,348, while the Nifty 50 was down 163 points at 23,397.
₹5 Lakh Crore Wiped Out in a Day
The total market capitalization of BSE-listed companies plunged from ₹424 lakh crore to ₹419 lakh crore, resulting in an investor wealth erosion of ₹5 lakh crore in just one session.
Why is the Indian Stock Market Falling?
Several factors have contributed to this market turmoil, ranging from global economic concerns to domestic valuation worries. Here’s a breakdown of the key reasons:
1. Trump’s Tariff Shock
One of the biggest factors impacting global markets, including India, is former US President Donald Trump’s aggressive trade policies. According to reports, Trump plans to impose a fresh 25% tariff on steel and aluminum imports, which has triggered fears of a trade war escalation.
As the US is a major trade partner, any increase in tariffs on key commodities affects Indian metal and manufacturing stocks, leading to increased volatility.
2. Stretched Valuations Despite Correction
The Sensex has already corrected over 9% from its all-time high of 85,978.25, but experts argue that the market is still overvalued.
Valuation guru Aswath Damodaran has labeled the Indian stock market as one of the most expensive in the world, raising concerns over unsustainable stock prices. Market experts believe that unless strong GDP growth and corporate earnings rebound, valuations will remain high, keeping investors cautious.
“The Indian market remains expensive, particularly in mid- and small-cap segments. Investors should focus on high-quality, fairly valued large-cap stocks.”
– V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
3. Weak Corporate Earnings
While Q3 earnings have shown marginal improvement, they still fail to inspire confidence. A lack of strong earnings growth has weighed on market sentiment, leading investors to book profits and stay on the sidelines.
4. Heavy Foreign Capital Outflows
Foreign Institutional Investors (FIIs) have been consistently pulling money out of the Indian markets. Since October last year, FIIs have sold nearly ₹2.75 lakh crore worth of Indian equities. In February alone, FIIs have offloaded over ₹10,000 crore, adding to selling pressure.
“Relentless FII selling is the biggest reason behind the market downturn. Concerns over US tariff policies are further worsening the sentiment.”
– Prashanth Tapse, Senior VP of Research, Mehta Equities
5. Weakening Indian Rupee
The Indian rupee hit a fresh record low of 87.92 against the US dollar, slipping by 49 paise from Friday’s close. The 3% depreciation in the rupee this year signals economic weakness, which discourages foreign investors.
A weak rupee leads to capital outflows, making the Indian stock market less attractive to global investors.
Key Financial Ratios
| Parameter | Value |
|---|---|
| Sensex P/E Ratio | 23.5 |
| Nifty 50 P/E Ratio | 21.8 |
| Market Cap-to-GDP Ratio | 110% |
| FIIs Net Outflow (Feb 2025) | ₹10,000 crore |
| Rupee vs. Dollar Exchange Rate | 87.92 |
What Should Investors Do Now?
With the market facing multiple headwinds, investors need to be cautious. Experts suggest:
✅ Stick to Large-Cap Stocks: These companies tend to be more stable in uncertain times.
✅ Avoid Highly Overvalued Stocks: Focus on companies with strong fundamentals and fair valuations.
✅ Stay Invested for the Long Term: Short-term volatility is normal, and long-term investors should use corrections as buying opportunities.
✅ Monitor Global Developments: Keep an eye on US trade policies, corporate earnings, and rupee movements.
Final Thoughts
The 600+ point crash in Sensex and the ₹5 lakh crore investor wealth erosion have shaken the Indian stock market. However, long-term investors should remain patient and focus on quality investments.
With foreign outflows, weak earnings, and global economic concerns, short-term volatility may persist. But for those who can weather the storm, the Indian market remains a strong long-term growth story.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.