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The Indian equity market experienced a significant downturn last week, witnessing its steepest weekly decline since June 2022. This sharp fall, impacting the market capitalization of the top ten most valued companies, resulted in a collective loss of Rs 4,95,061 crore. The primary catalyst for this decline was the unexpected shift in the US Federal Reserve's outlook on interest rate cuts. Instead of the anticipated four rate cuts in 2025, the Federal Reserve, led by Chair Jerome Powell, revised its prediction to only two. This unexpected announcement sent shockwaves through the global markets, dampening investor confidence and triggering a sell-off. The BSE Sensex plummeted by 4,091.53 points (4.98%), and the Nifty experienced a 4.77% drop, underscoring the severity of the market reaction.
Among the top ten companies, Tata Consultancy Services (TCS) and Reliance Industries bore the brunt of the market's decline. TCS's market valuation decreased by a substantial Rs 1,10,550.66 crore, bringing its total valuation down to Rs 15,08,036.97 crore. Similarly, Reliance Industries, despite retaining its position as the most valued company, saw its market capitalization fall by Rs 91,140.53 crore, settling at Rs 16,32,004.17 crore. Other prominent companies also suffered significant losses. HDFC Bank experienced a decrease of Rs 76,448.71 crore in its market capitalization, Bharti Airtel saw a reduction of Rs 59,055.42 crore, and State Bank of India's market cap fell by Rs 43,909.13 crore. ICICI Bank, Infosys, LIC, Hindustan Unilever, and ITC also registered notable declines in their valuations, highlighting the widespread impact of the market downturn.
The steep decline in the market capitalization of these leading companies underscores the fragility of the current economic climate and the significant influence of global economic factors on the Indian stock market. The Federal Reserve's decision, while seemingly a domestic US policy matter, had immediate and substantial repercussions on global markets, demonstrating the interconnectedness of the world economy. This event serves as a stark reminder of the inherent risks involved in equity investments and the importance of diversification and careful risk management for investors. The volatility of the market, exacerbated by unexpected policy shifts, highlights the need for investors to stay informed and adapt their strategies to navigate unpredictable market conditions. The coming weeks will be crucial in determining whether this decline represents a temporary correction or the beginning of a more prolonged bear market.
Further analysis is needed to understand the long-term implications of this market downturn. Factors such as global inflation, geopolitical instability, and domestic economic growth will all play a significant role in shaping the future trajectory of the Indian stock market. The performance of these top ten companies, which represent a significant portion of the overall market, will be a key indicator of the health and resilience of the Indian economy. Investors and analysts will be closely monitoring these companies' performance and the broader market trends to gauge the overall economic outlook and make informed investment decisions. The ripple effect of this market downturn on the broader Indian economy and its impact on job creation and consumer sentiment will also need to be carefully considered.
Source: M-cap of top 10 valued companies declined Rs 4.95 lakh crore