The stock market, which had reached record levels in September 2024, is now facing a major downturn, with both Sensex and Nifty declining significantly in the past few months. On Makar Sankranti (14th January), there was a slight uptick in the market, but the overall trend is worrying. In just 100 days, stock market investors have lost an enormous Rs 60 lakh crore, largely due to foreign institutional investors (FPIs) pulling out their investments.

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The Market’s Dramatic Fall: A 10% Drop Since September’s Record High

On September 27, 2024, Sensex and Nifty were riding high, with Sensex peaking at 85,978.25 points, marking a 52-week high. Since then, the market has witnessed a substantial decline. As of now, the Sensex has fallen by 9,642.5 points, or 11.21%, while Nifty has dropped by 3,143.2 points, or approximately 12%. This sharp decline reflects the broader weakness in global markets and concerns surrounding the Indian economy.

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Foreign Investors Pull Back: Rs 1.85 Lakh Crore Exit

One of the key drivers of this market downfall has been the massive withdrawal by FPIs. Between October and January 12, FPIs sold shares worth Rs 1.85 lakh crore, reacting to global economic pressures, including a weakening rupee and rising crude oil prices due to new sanctions on Russia. While domestic investors, including mutual funds and DIIs (domestic institutional investors), invested Rs 2.18 lakh crore during this period, their buying couldn’t prevent the market from sliding further. DIIs were often seen buying at lower prices, which reflects a strategic move to exit at a more favorable time.

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Rupee Depreciation & Crude Oil Surge: A Double Whammy for the Stock Market

The fall in the rupee’s value, which has dropped by 3.4% against the US dollar since September, has had a ripple effect on foreign investment. The depreciating rupee means lower returns for FPIs when converted back into their home currencies. Additionally, Brent crude prices have surged by 12% since September, crossing the $80 per barrel mark. This has added to the pressure on the Indian market, making it less attractive to foreign investors.

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Rising Bond Yields: A Global Factor Impacting Market Sentiment

Another global factor contributing to the stock market’s downfall is the increase in US bond yields. Bond yields have risen from 3.7% in mid-September to 4.76% today. With the US Federal Reserve cutting interest rates for the first time in four years, these rising bond yields have made US investments more attractive, drawing capital away from emerging markets like India.

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BSE Market Cap Plummets: Investors Lose Rs 60 Lakh Crore in 100 Days

The impact on Indian investors has been catastrophic. On September 27, the market capitalization of the Bombay Stock Exchange (BSE) stood at Rs 4.77 lakh crore. By mid-January 2025, after the stock market declines, this figure had plummeted to Rs 4.18 lakh crore, a staggering loss of Rs 60 lakh crore in just 100 days. This sharp fall reflects the magnitude of the market’s correction and the resulting damage to investor portfolios.

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Stock Market Shows Minor Gains: Sensex and Nifty Rebound Slightly on January 14

Despite the worrying downward trend, there was a slight recovery on January 14, 2025, with the Sensex gaining 169.62 points, closing at 76,499.63 points. The Nifty also closed higher by 90.10 points, ending the day at 23,176.05 points. However, these minor gains are not enough to offset the significant losses investors have faced since the market’s peak in September.

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Looking Ahead: Can the Market Recover?

While the current outlook is grim, there are still concerns surrounding the continued exit of FPIs, rising oil prices, and the depreciating rupee. Whether the market can recover or if further corrections are in store remains uncertain. For now, investors will need to remain cautious and monitor global factors closely, especially as FPIs seem unlikely to return in the near future.

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