Investors lose over ₹6.97 lakh cr in 4 days as Sensex erases 60k; can GDP numbers bring bulls back?

Markets tumbled for the fourth day in a row with Sensex and Nifty 50 touching their lowest levels in five months. This led to massive wealth erosion for investors. On Wednesday alone, investors lost more than ₹3.87 lakh crore in wealth. While in four trading sessions, the wealth has dipped by over ₹6.97 lakh crore. Sensex has erased its psychological mark of 60,000, and Nifty 50 struggled below 17,600 levels.

On February 22, BSE-listed companies' market cap stood at ₹2,61,33,879.49 crore. This is lower by ₹3,87,228.19 crore from the previous print.

On Tuesday, the market cap of BSE-listed equities was around ₹2,65,21,111.74 crore.

The market has been in red since February 17th. A day before this (February 16th), the market valuation was around ₹2,68,30,985.60 crore. From this level to date, the valuation of BSE equities has tumbled by a whopping ₹6,97,106.11 crore.

Today, Sensex and Nifty 50 dropped by over 1.5% each due to weak global cues as investors focus on RBI and US Fed's monetary policy minutes. The benchmarks have tumbled to their lowest levels since October 19 last year.

Sensex shed 927.74 points or 1.53% to end at 59,744.98. While Nifty 50 dipped by 272.40 points or 1.53% to close at 17,554.30 on Wednesday.

A broad-based selloff was seen across indices. BSE Sensex Next 50 took a massive hit with a drop of 623 points. While Midcap and Smallcap indices tumbled by over 1% each.

Banking stocks were the biggest losers compared to their counterparts. BSE Bankex shed nearly 746 points. Among other sectoral indices, on BSE, the IT index shed 349 points, and Metal was down by 338 points. Auto and Consumer durables also slipped by 339 points and 382 points respectively. Capital Goods was lower by 426 points. Financial Services and Energy indices were down 1.7% and 1.5%.

S Ranganathan, Head of Research at LKP Securities said, "Indian Equities opened gap down today on the back of weak global cues led by the Russian stance on the conflict and the likely stance by the FED & RBI on interest rates."

Also, Sugandha Sachdeva, a market expert said, "there is a lot of wariness in the markets as the recent string of robust economic data from the US, indicating a resilient economy and hotter-than-expected inflation print has stoked worries about a higher peak rate in the US."

Sachdeva added, "this has rattled sentiments and with Wall Street key indices witnessing a broad sell-off, we are likely to see a soft opening for the domestic markets. Typically, a strong economy is perceived as a positive signal for the markets, but since the Fed is currently battling high inflation, a slightly soft economy is something that is required for price pressures to ease further."

India is set to release quarterly GDP estimates for October - December 2022 period on February 28.

Last week, BSE-listed equities market cap gained overall by more than ₹1.10 lakh crore. Between February 13th to 16th, the upside in valuation was by over ₹2.54 lakh crore. However, the selloff on February 17, pulled-back from some of the gains.

What will be the GDP numbers in Q3?

According to Jyoti Prakash Gadia, Managing Director at Resurgent India, with continued uncertainties on the global front and sticky core inflation trends, the growth prospects in the coming quarters are not very encouraging. world over, various agencies are predicting a downward revision of the growth projections for most of the major economies which will also impact India. The incipient recessionary trends with higher inflation levels and continued supply-side constraints will have an adverse impact on production.

Although agriculture is expected to perform reasonably, she added that "the overall demand growth is not adequate and as a result, the Q3 growth rate of GDP is expected to be lower in the range of 4% to 4.5 %."

Gadia lastly concluded, "while the overall full-year growth prospects are converging towards 6.5 % to 7.%, the Q3 and Q4 rates are also likely to be impacted by the 'Base Effect ', thereby resulting in growth expectations. The next financial year may, however, bode well on the GDP front with positive outcomes of infrastructure and logistics development being emphasized by the Government."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.