Share Market Crash: The nature of the stock market depends on the world events and its impact. The current upheaval in the Middle East is having a significant impact on the stock market. But in all this, a new trend is emerging in the stock market these days. Generally, the morning session initially starts the market positively; However, as the last phase of the trading session comes, the market begins to decline. Something similar was seen on Friday. Today’s decline was particularly sharp, leaving investors speechless. Let’s understand what exactly happened and what are the reasons behind it.

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What exactly happened in the last half hour?

Especially in the last half hour of trading, things took a big turn. There are two main reasons behind this incident, which caused investors to lose lakhs of crores of rupees. In that last half hour, BSE’s market capitalization plummeted, wiping out Rs 5.56 lakh crore of investors’ wealth in one fell swoop. Specifically, the Sensex fell 1,092 points or 1.45 per cent to settle at 74,775 by market close; Nifty closed down 359 points or 1.50 percent at 23,547 points. Meanwhile, the midcap index fell around 1 percent, while the smallcap index fell as much as 1.30 percent. Due to this decline, BSE’s market capitalization came down from ₹470 lakh crore to ₹465 lakh crore.

2 factors are responsible for the volatility in the last phase i.e. last 30 minutes

1. Monsoon concerns

Monsoon conditions have added to market jitters. The India Meteorological Department (IMD) has lowered its rainfall forecast, compared to previous forecasts. The news didn’t go down well with the market amid scorching heat and the agricultural sector desperately waiting for rains. This could potentially be a major blow to the Indian economy. Moreover, the income of millions of people is likely to decline. Agricultural production, rural demand and corporate earnings could all be affected. As a result, the market has reacted strongly to this development.

2. MSCI also gave a shock

At 3 pm, another news came out, which put the Indian market under stress. The changes in the MSCI India index were to take effect from May 29. The MSCI is one of the world’s largest global indices and the multi-billion dollar funds that follow its index are adjusted accordingly. When some stocks are included in the index and others are excluded, the fund is forced to buy and sell simultaneously. This phenomenon, known as basket selling and basket buying, has led to falls and rises in the market. After these two reports, selling pressure increased in the market and investors sold heavily. Reliance, Indigo and Powergrid saw the most significant sales.

(Note: Consult your financial advisor before investing in any share.)

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