October 2024 has made the investor’s wealth decline significantly as India’s market cap dropped significantly by around 8%. Since the pandemic happened in 2020, this has been the market’s steepest fall. But what triggered the market to drop drastically this month? Let’s find out.
Market Capitalization and Global Ranking
From this October, until today, the market capitalization has tanked by a whopping 7.6% or $37 billion. This has made the country’s market cap settle at $4.53 trillion which was at $4.90 trillion a month back. That said, the other four countries took over India when it came to declining market cap this month. There is Belgium with a decline of 11%, followed by Portugal with a decline of 10%, 8.6% for Venezuela, and 8.4% for the Netherlands.
Factors for Declining Market Cap
The massive fall in the country’s market cap can be attributed to the following reasons –
- Extremely inflated market prices which made the investors both globally and domestically worry about market corrections.
- FIIs and FPIs pulled out massive amounts of funds from the Indian markets this month owing to the fear of market correction.
- The US election is near and thus the bond yield is increasing in the US which also made the FIIs turn their back on the country
- Increasing tension between the Middle Eastern countries also triggers investors to withdraw their investments.
- This is also increasing the fuel prices and making it volatile which is again making both FIIs and domestic institutional investors worried.
- Finally, the poor second-quarter results also took a toll on the stock prices and took the market cap down.
Valuation across market capitalization
The large-cap and the high-end mid-cap stocks are highly inflated. Their valuation is extremely high and that also led to a downgrade in their earnings. In addition, the high-narrative stocks are still overpriced even after some corrections.
Goldman Sachs downgrading the rating for Indian stocks has also made the investors worried, and some other analysts and experts have the view that the market will correct itself further.
Market Movement
Sensex and Nifty both declined significantly this month. BSE Sensex dropped by over 5% this month while Nifty 50 dropped by 5.70%. While this month is having all the important festivals of the year, from Navaratri to Diwali that couldn’t excite the investors. The macroeconomic factors are playing a crucial role here which is dragging the markets down and eroding the market value.
Source: MoneyControl
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