September 19, 2024

Huge Crash In Stock Markets

By Linus Garg
First publised on 2023-10-27 08:44:43

About the Author

Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

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On Thursday 26^th October, stock markets, which were on slippery ground for the last five trading sessions, saw huge selling by foreign funds due to the worsening war situation in the Middle-East. The Sensex crashed by 901 points on the day, taking the total losses to nearly 3300 points in just six trading sessions. Investors have lost a combined Rs 17.8 lakh crore in these six sessions. Along with the scare generated by the war-like situation in Gaza, foreign funds are also withdrawing funds as the yield on government bonds in the US is rising.

Initially, given Israel's record of responding promptly and harshly to any security threats, the markets had discounted the situation there and thought that the matter will end with a retaliatory strike by Israel. But with hostages in captivity, Hamas has an upper hand as of now and it seems that the situation will remain tense for a longer period. That is likely to affect economies around the world as supply chains will be disturbed and demand will go down.

There has not been any fundamental change in the attractiveness of Indian stocks in the last 15 days. The markets were rising even after the Hamas attack. But it seems that foreign funds have now accounted for a long-drawn affair in Gaza that will lead to uncertainty. Still it is dismaying that foreign funds are withdrawing funds from India, a country that is not likely to be majorly disturbed by the conflict. Hence, the crash in the market is an opportunity for the shrewd investor to pick up selected and fundamentally-strong shares at a discount. For those who had invested when the markets were rising, this is not the time to sell. They must hold and wait for the situation to improve.