Stock Market Crash: Investors on Dalal Street have suffered a major setback on the first trading day of the week. The vibrancy that returned to the market last week largely disappeared on Monday. The selling pressure was so intense that within a few hours investors had almost Rs. 2.34 lakh crore was lost. After this major decline, the total market cap of all the companies listed on BSE fell to Rs. 470 lakh crore has become.

At 1:50 pm, the Sensex was trading down over 1,000 points at 73,729. At the same time, the Nifty 50 also fell by over 250 points to slip below the crucial level of 22,900. The atmosphere of fear in the market can be understood from the fact that the India VIX, which measures volatility, jumped over 3 percent to cross 14. A total of 2,474 shares declined on the NSE, while only 894 shares remained in the green. There was no change in the price of 94 shares.

Small and mid cap stocks also witnessed weakness. The Nifty Midcap 100 and Smallcap 100 indices fell by 0.7 percent. Sector-wise, the Nifty Private Bank was down around 2 per cent, while the FMCG and Financial Services indices were down over 1 per cent. However, amid this all-out sell-off, public sector banks showed strength and the Nifty PSU Bank index rose nearly 2 percent. Among stocks, Adani Ports and Maruti Suzuki gained up to 2 percent against the trend, while Infosys, Trent, HUL, Bajaj Finserv, NTPC and Bajaj Finance declined up to 2 percent. However, the market saw some recovery at market close.

Why shares of big banks fell after good quarterly results?

Big private banks played a role in bringing down the market on Monday. Axis Bank and HDFC Bank saw heavy selling after their second quarter (Q2FY27) results fell short of market expectations. Axis Bank’s standalone net profit rose 38 percent year-on-year to Rs. 7,003 crores. Despite the increase in profits, it came out below market experts’ estimates. As a result, Axis Bank shares fell by more than 5 percent and became the top loser of the Sensex.

Similarly, country’s largest private bank HDFC Bank’s net profit rose 4.6 percent in the second quarter to Rs. 19,510 crore, compared to Rs. 18,641 crores. But as the market expected better numbers, shares of HDFC Bank also fell by more than 2 percent. Apart from this, shares of ICICI Bank and Yes Bank also fell by more than 1 percent.

Crude oil prices were under pressure

The second biggest headache of the market is crude oil. Donald Trump has decided to ease the strict sanctions imposed on Russia, including in its energy sector. After this, Brent crude futures softened by more than 2 percent on Monday, but are still well above last week’s levels of more than $107 per barrel. While WTI crude is also trading around $100 per barrel.

US Secretary of State Marco Rubio has made it clear that Trump will take up to 60 days to assess the economic impact of the concession. Just last week, Brent crude touched $110 a barrel due to rising tensions in the Middle East and questions about the safety of maritime vessels. This was the first time oil reached this level since May.

Sales by foreign investors dominate

Weak global signals are also responsible for Dalal Street’s decline. US markets saw a heavy sell-off on Friday, with the Nasdaq down more than 2 percent and the S&P 500 index down more than 1 percent. Asian markets were also weak on Monday. Japan’s Nikkei fell 0.64 percent, while Indonesia’s Jakarta Composite fell more than 5 percent. At the same time, South Korea’s Kospi rose about 2 percent, as investors there bought AI shares at lower levels. Indian stocks are seen as an ‘anti-AI’ option in the global market. So, whenever AI stocks rise in foreign markets, pressure is seen in the Indian market.

Apart from this, profit-booking and continued selling by foreign institutional investors (FIIs) also dampened the market mood. The Nifty gained more than 2 percent in the two sessions on Thursday and Friday. Tuesday is a holiday in the market and weekly expiry of Nifty also took place on Monday, due to which investors started booking profits. Foreign investors on Friday invested Rs. 1,166 crore, but has sold heavily in 9 of the 11 trading sessions so far in October.

How will the market fare in the future?

VK Vijayakumar, chief investment strategist at Geojit Investments, said last week’s 2.8 per cent rise in the Nifty and good results from banking giants after IT have the power to handle the market. But rising tensions in Hormuz and Brent crude around $109 will be a major hurdle for the market. According to him, attractive valuations of large-cap stocks and strength in the rupee certainly made foreign investor sentiment slightly positive, but it is difficult to sustain due to expensive crude. In such an environment, large-cap stocks will continue to outperform mid-cap and small-cap stocks and this week will see action in stocks based on second quarter results.

At the same time, Hemang Gor, senior research analyst at Axis Direct, believes that the market may remain volatile throughout the day due to Monday’s weekly expiry settlement. Technically it is very important for Nifty to maintain the level of 23,000. In today’s trading there is an important support for Nifty at 22,950, while on the upside there is a strong barrier at 23,300.