Understanding the Stock Market Crash Amid Escalating Global Tensions

Stock Market Crash: A Deep Dive

The stock market crash on October 3 witnessed both the Sensex and Nifty plummeting over 2%, reflecting a significant downturn in BSE-listed companies. The market capitalization of these companies dropped nearly ₹9 lakh crore, representing the worst intra-day fall in two months. These developments have raised concerns among investors about the sustainability of recent gains, further complicating market conditions in light of geopolitical events.

Market Capitalization Trends

• Market cap tumbled from ₹4,74.86 lakh crore to ₹4,65.07 lakh crore.
• Investors are reevaluating the valuations of PSUs in light of soaring prices against profits.
• Kotak report highlights overlooked risks due to high valuations.

Geopolitical Tensions

The ongoing crisis in the Middle East, especially the killing of Hamas leader Rawhi Mushtaha by Israeli airstrikes, has escalated tensions. This situation poses a potential impact on global economies and investor strategies.

Reaction to US Reports

India's Ministry of External Affairs reacted sharply against the US religious freedom report, calling it politically biased. Such geopolitical factors further influence investor confidence and market stability.

Market Outlook for FPIs

Despite recent losses, foreign portfolio investors continue showing interest, having invested nearly ₹90,000 crore in Indian equities this financial year, reflecting a contrarian view against prevailing market conditions.