Investor wealth tanks by Rs 19.4 lakh cr as Sensex, Nifty see worst wipeout since Covid

Indian equity markets witnessed a severe meltdown on Monday, with benchmark indices plummeting nearly five per cent each, marking one of the worst trading sessions since the Covid-19 pandemic. The BSE Sensex tanked 3,244.46 points, or 4.31 per cent, to close at 72,120.23, while the NSE Nifty fell 4.87 per cent, breaching the 21,800 mark.

This dramatic fall comes in the wake of escalating global concerns over a looming recession and heightened trade tensions, triggering widespread panic across sectors.

The market capitalisation of all listed companies on the BSE eroded by a staggering Rs 19.4 lakh crore, settling at Rs 383.95 lakh crore. The volatility Index, a key measure of market fear, soared over 50 per cent, underscoring the scale of investor anxiety.

Technology and metal counters were hit the hardest, with the Nifty IT Index down six per cent and the Nifty Metal Index plunging seven per cent. Shares of companies with significant exposure to the United States bore the brunt of the sell-off.

Tata Steel led the decline with an 8.08 per cent fall, closely followed by Tata Motors at 5.70 per cent and Larsen & Toubro at 6.56 per cent. Major IT firms such as Infosys, HCL Technologies, Tech Mahindra, and TCS also witnessed sharp declines ranging between four and five per cent.

This steep correction follows sharp drops across global markets. On Friday, the S&P 500 sank six per cent, while the Dow Jones Industrial Average shed over 2,000 points — its worst week since the Covid-19 crisis. The slide was exacerbated by China’s announcement of a 34 per cent retaliatory tariff on all US imports effective 10 April, further straining already fraught trade relations. Asian markets were not spared either, with China and Japan indices plunging 10 per cent and eight per cent respectively.

Vikas Jain, Head of Research at Reliance Securities, noted that investors were increasingly pricing in the risk of a global recession, driven by policy shocks and trade escalations. “This goes beyond inflationary concerns — we are staring at a potential downturn that could have a far-reaching impact,” he told PTI.

While the downturn draws comparisons to 'Black Monday' in 1987 — when the Dow plunged 22.6 per cent in a single day — analysts pointed out key differences. “In 1987, India was largely insulated. Today, we are deeply integrated with global capital flows, and algorithmic trading has intensified the pace of declines,” said analysts at Angel One. They emphasised that the current collapse, though sentiment-driven, has been rapidly magnified by high-frequency trading systems.

As global liquidity tightens, concerns are mounting about India’s capacity to maintain robust earnings growth — a factor critical to sustaining foreign institutional interest. “If earnings per share begin to shrink, we could see the Nifty testing levels around 20,000 or lower,” said Manish Jain, Chief Strategy Officer at Mirae Asset Capital Markets. He added that earnings estimates for CY25 and CY26 have already been trimmed by seven per cent and two per cent respectively.

Despite the bloodbath, some voices urged calm. “Panic is rarely a strategy,” said Arvind Kothari, Founder of Niveshaay and a smallcase manager. “We encourage investors to stay grounded in fundamentals. While sectors linked to global markets may take longer to recover, domestic consumption-led segments like FMCG may prove more resilient in the near term.”

Michael Cembalest, in a recent note, highlighted that historically, investing after a 15 per cent decline in the S&P 500 has yielded favourable returns. However, with US business optimism and leading indicators softening, the broader outlook remains cautious.

Among the carnage, Hindustan Unilever emerged as a rare gainer, inching up by 0.16 per cent. Yet, the overall picture remains bleak, with sentiment battered and investors bracing for further volatility.

The coming days, particularly the earnings season, will be critical in determining whether this sharp correction stabilises or snowballs into a prolonged downturn.

With agency inputs