Rising tensions between Iran and Israel had the Indian stock market bleeding this week causing sharp declines in the leading indices two days in a row. Yesterday, October 3, 2024, investors lost nearly Rs 10 lakh crore in a single day. Today, the chaos continued with the markets closing deep in the red. Nifty ended 1% lower for the fifth straight session.

On Thursday, the markets took off with a sharp decline. The Sensex opened with a loss of around 800 points and by the time the stock market closed, it had plunged by 1,769 points (2.10%), ending at 82,497. The Nifty closed 546 points down (2.12%), settling at 25,250.10.

Friday’s stock market witnessed an extremely volatile trading day. It opened lower but managed to make some recovery before ending in the red. The benchmark indices extended massive losses for the fifth straight session. This comes on the heels of an over 2 per cent decline in the previous session.

Today, the Sensex ended 808.65 points or 0.98 per cent at 81,688.45 while the broader Nifty fell 200.25 points or 0.8 per cent to settle at 25,049.85 in a brisk selling this afternoon as fears of retaliatory action by Israel against Iran loomed large over the global markets. Sensex and Nifty have recorded their biggest weekly fall since June 2022.

This is the third day this week that the market has seen a decline. On Monday, the Sensex had fallen by over 1,200 points. Tuesday’s trade saw a slight dip. On Wednesday, the market was shut for trade on the occasion of Gandhi Jayanti.

Since September 27, the Sensex has crashed by 4,148 points in just five trading sessions as the combined market capitalization of BSE-listed stocks fell by Rs 15.9 lakh crore to Rs 461.26 lakh crore.

On Tuesday, October 1, nearly 200 ballistic missiles were launched by Iran towards Israel in retaliation for the Israeli air strike in the southern outskirts of Beirut last Friday. Because of this foreign investors in emerging markets became even more cautious.

Apart from the Iran-Israel tension, other factors triggering the markets to bleed include China's stimulus package and changes in F&O (Futures & Options) following new SEBI regulations.

Provisional data indicate that Foreign Institutional Investors (FIIs) have pulled out Rs 32,000 crore from Dalal Street due to worries about peak valuations, resulting in Nifty dropping below its important support levels. The outflow of FII funds from India to China accelerated due to Chinese stimulus measures, as stocks in China were being traded at more affordable valuations.