A loss of 16 lakh crore rupees in 5 days... Why did the stock market fall so drastically

Stock Market Crash: The Indian stock market witnessed a massive decline last week. Investors lost 16 lakh crore rupees in just 5 days. Nearly 7 lakh crore rupees were lost on Friday alone.

Stock Market Crash: The past week (September 22nd to 26th) was not a good week for the stock market. During this period, the Indian stock market recorded a massive decline. This decline was so severe that investors lost 16 lakh crore rupees in just 5 days. Nearly 7 lakh crore rupees were lost on Friday alone. On Friday, the Sensex fell 733.22 points, or 0.90 percent, to close at 80,426.46. With this, it has recorded a decline of approximately 2,587 points in the past week. Meanwhile, the Nifty 50 fell 236.15 points, or 0.95%, to close at 24,654.70.

Why did the stock market decline?

IT stocks are under pressure due to US President Donald Trump's decision to increase fees for H-1B visas. This led to the biggest decline in IT stocks. Consequently, Nifty IT was the biggest loser on Friday. Shares of Indian IT companies like TCS, HCLTech, and Infosys fell for the sixth consecutive session on Friday. The Nifty IT index fell 8%. TCS suffered the biggest loss. TCS fell to a 52-week low, marking its worst week since March 2020. The six-day decline in IT stocks has resulted in a loss of over ₹2 lakh crore in market capitalization.

Trump has also announced a 100% tariff on the import of branded and patented medicines from October 1. Following this, shares of several Indian pharmaceutical companies, including Sun Pharma, Lupin, Aurobindo Pharma, Glenmark Pharma, and Cipla, fell by up to 10% on Friday. There are also fears that the tariffs will also cover generic medicines, which constitute a significant portion of many of these companies' portfolios. Shares of smaller pharmaceutical companies, such as Wockhardt and Caplin Point, fell by up to 10%, while Sun Pharma's shares hit a 52-week low.

Selling by foreign investors is also a major reason for this decline in the stock market. On Friday, foreign investors sold domestic shares worth Rs 16,057.38 crore. Meanwhile, Indian investors also sold shares worth Rs 11,464.79 crore.

Nifty Bank was the biggest contributor to the index's 1,000-point gain last week. However, Nifty received little support from the banking index. Nifty Bank not only failed to hold the 55,700 level on the upside, but also fell below the 55,000 mark and the crucial 54,500 support zone, increasing pressure on Nifty.

The rupee's decline against the dollar since Monday also impacted the stock market. The rupee weakened against the dollar and is trading around 88.

Next week will be crucial for the market. Second quarter business updates will begin next week. Auto sector sales data will also be released on October 1. The RBI's Monetary Policy Committee is also scheduled to meet next week, where an update on the repo rate is expected. Quarterly results will begin with the announcement of TCS's quarterly results on October 9. Next week is also a short week, as Thursday is a holiday.