Carnage On Stock Exchanges: Investors Lose Rs 6.71 Lakh Crore In A Single Session
By A Special Correspondent
First publised on 2022-05-19 17:46:06
About the Author
The stage
was set for a rout in the stock markets on Friday as global and local cues were negative.
The Dow Jones had crashed by 1000 points or 3% on Thursday and the UK had
reported that inflation was at 9%, the highest in over 40 years. With India
also reporting that inflation, as measured by the wholesale price index (WPI)
had breached the 15% level and was highest in 9 years, investors were spooked.
The markets also seem to be getting ready for another big hike in interest
rates as the RBI governor gave a hint yesterday by saying that the off-cycle
hike was done to prevent the shock of a much bigger hike in the regular June
meeting. The RBI is likely to raise rates by 75 basis points, effectively
negating the concessions given due to the pandemic and bring rates back to what
they were in March 2019.
All this,
and the fact that technology stocks have lost investor faith all over the
world, meant that the Sensex crashed by 1416 points to end at 52792 and the
Nifty slid by 430 points to finish the day at 15809 points. Both the indices
slumped by more than 2.5%. As all over the world, IT stocks were hammered down
by up to 6% and investors lost as much as Rs 6.71 lakh crore in a single
session. FMCG major ITC bucked the trend and rose by 3%. FIIs continued to be
net sellers.
The carnage
does not seem to have ended as after the Indian markets closed for business,
the US markets continued to witness selling pressure. The Dow Jones was down
1.5% on Friday after the big slide a day earlier. This shows that the bears
have got a firm grip on the markets and the period of volatility witnessed in
Indian markets for over a month now has now become a one-way downhill journey.
It is difficult to predict when sentiments will improve as the world battles
with inflation, disturbed supply chains due to the war in Ukraine, monetary
policy tightening by central banks worldwide and the after effects of a long
pandemic.
