On Thursday, October 3, 2024, the Indian stock market witnessed a crash as escalating geopolitical tensions between Israel and Iran, coupled with regulatory changes by the Securities and Exchange Board of India (SEBI), rattled investor sentiment. The BSE Sensex plunged by over 1,200 points, while the NSE Nifty dropped more than 300 points intraday, reflecting a widespread sell-off.
Geopolitical Tensions Drive Stock Market Crash
The primary driver behind this stock market crash was the intensifying conflict between Israel and Iran. The death toll from an Israeli airstrike on Beirut, alongside missile attacks on Tel Aviv, raised alarms globally. Israeli Prime Minister Benjamin Netanyahu’s pledge to retaliate heightened concerns of a prolonged conflict, which could disrupt global trade and oil prices. Investors are wary of the conflict’s potential to affect the broader global economy, with stock markets worldwide showing signs of distress.
SEBI’s Tightened F&O Regulations resulted in Stock Market Crash
The stock market’s woes were worsened by new SEBI regulations aimed at reducing speculative trading in futures and options (F&O). The company has created a six-step plan to curb retail participation in these risky trades by raising contract sizes and mandating upfront premium payments. However, this move has led to fears of reduced trading volumes, with analysts predicting a 30-40% drop in F&O activities. This regulatory tightening, while intended to safeguard small investors, has contributed to the market’s short-term volatility.
Foreign Institutional Investors Continue to Sell
Foreign Institutional Investors (FIIs) have been on a selling spree for much of 2024, adding to market pressure. FIIs have shifted their focus to undervalued Chinese stocks, as Indian equities are seen as overvalued. This capital outflow further deepened market losses on October 3, with FIIs offloading shares worth ₹5,579.35 crore on the first trading day of October alone.
Sectoral Impact and Market Outlook
All major sectors ended the day in the red, with Nifty Realty and Nifty Auto witnessing the steepest declines. Broader indices like the Nifty MidCap and Nifty SmallCap also saw significant drops, reflecting the market-wide pessimism. Analysts caution that unless geopolitical tensions ease and market conditions stabilize, further corrections may follow.
Let’s explore some humorous approach of Indian netizens towards this serious crash –
The Indian stock market’s immediate future remains uncertain, with global developments and regulatory measures playing a critical role in determining the market trajectory. For investors, this period calls for caution and a well-strategized approach to weather the storm of volatility.
