The Indian stock market experienced a significant downturn on Monday, with the benchmark BSE Sensex plummeting by over 1,700 points, translating to a decline of 2.3% by 10:30 AM. The Nifty index followed suit, dropping 2.4%, equating to a loss of more than 560 points. This alarming trend has resulted in investors facing potential losses exceeding Rs 11 lakh crore, as reported by The Economic Times. The market’s woes began on March 2, coinciding with escalating tensions in West Asia and rising energy costs.
Foreign investors have been fleeing the Indian stock market, with a staggering withdrawal of approximately $9.5 billion over the past three weeks, according to Reuters. The fallout of these geopolitical developments is evident as the India VIX index, which gauges market volatility, surged by 15.3% on Monday, indicating heightened investor anxiety.
Not only is India feeling the impact, but major stock indices in Asia are also in a downward spiral. By 10:30 AM Indian time, Hong Kong’s Hang Seng index had plummeted by 3.2%, while South Korea’s Kospi and Japan’s Nikkei fell by 5.8% and 3.5%, respectively. Similarly, China’s Shanghai Composite index reported a decline of 2.3%, reflecting the widespread ramifications of the ongoing conflict.
As the stock market falters, the Indian rupee has also taken a hit. The currency plunged to a record low of 93.9 against the US dollar on Monday, a steep decline driven by the outflow of foreign investments and falling stock prices. The rupee lost 41 paise since Friday’s market close, a worrying sign for the Indian economy as it grapples with external pressures. Other major Asian currencies have also been affected, depreciating between 0.1% and 0.8% as the conflict enters its fourth week, showing no signs of abating.
In light of these developments, economic experts are urging caution and advising investors to carefully consider their strategies in this volatile environment. The ripple effects of global events are clearly becoming more pronounced in India’s financial landscape, prompting questions about the resilience of the market moving forward.
