Stock Market Crash Today: If you are also wondering what happened in the Indian stock market, due to which there was a loss of thousands of crores of rupees in a day, then you are not alone. Actually, on 19 December 2024, the Indian stock market faced a continuous decline for the fourth day, and in a few hours the Sensex saw a decline of about 1,200 points.
If this figure seems heavy to you, then you are absolutely right because this figure is really big. The main reason for this decline was the statement of the US Federal Reserve, in which it indicated to slow down the pace of reducing rates.
Why did this stock market decline happen?
Just think, if your bank tells you that we will give you less interest going forward, but not as soon as you thought, then what will happen to you? This is what happened with the Indian market. The US Federal Reserve announced a 0.25% cut in US interest rates on December 18, which was as expected. But the Federal Reserve also went ahead and said that there could be only two more rate cuts next year, which was much lower than market expectations.
The market expected that rates would be reduced four or five times, but the Fed’s words completely surprised the market. After this, there was a stir not only in the Indian market, but in the markets around the world.
Even the US dollar increased its strength, and a period of decline began in the major markets of Asia.
Important information about Stock Market Crash
- Market performance: Sensex closed down 964 points and Nifty down 247 points.
- Losses to investors: The total market capitalisation of BSE-listed companies declined by ₹3 lakh crore and hit a record loss of ₹9 lakh crore in four days.
- Sector-wise losses: Key sectors such as banks, financial services, IT and consumer durables suffered heavy losses.
- Reasons for decline: The key reasons for the decline include slow pace of interest rate cuts by the US Federal Reserve, FII selling, weak rupee, macroeconomic concerns and earnings uncertainty.
Who suffered losses?
Investors suffered the most in this decline. Foreign Institutional Investors (FIIs) investing in the Indian stock market suffered heavy losses. They were selling Indian shares for the last three days, and on this day they sold shares worth about Rs 8,000 crore. This further shocked the Indian market.
Apart from this, domestic investors (DIIs) also suffered losses, but their losses were less as they were doing some relief buying, which helped to stop the decline.
Value of Indian rupee fall down
You must have heard what effect it has if the value of one-rupee falls, and what happens when the rupee reaches a record low? On December 19, the Indian rupee had made a new record by falling to ₹ 85.3 against the US dollar. When the value of the rupee falls, it becomes expensive for foreign investors to invest in India. For this reason, foreign investors start selling Indian shares, which further pulls the market down. Apart from this, the weakening of the rupee increases inflation, and inflation demoralizes investors.
Pressure on India’s economic condition
India’s economy is also not looking very strong. India’s trade deficit reached a record level in November, reaching $37.84 billion. That is, India’s income is much less than its imports. This trade deficit weakens the Indian economy and causes concern for investors.
Also, India’s GDP growth rate is also slowing down, which indicates an economic crisis. This directly affects the stock market, because when the economy weakens, the profits of companies also decrease.
Decline in income and concern about the earnings of companies
Recently, the quarterly reports of Indian companies were also not very encouraging. The earnings of companies in Q1 and Q2 were much lower than expected. Now all eyes are on the December quarter (Q3). Experts are hoping that the profits of companies may improve in the December quarter, but some people are also saying that this improvement may be temporary and the real improvement will be seen next year (Q4).
So, did this fear cause a decline in the stock market? Yes! Investors were uncertain about the future, and this was the reason they started selling stocks, which led to a sharp decline in the market.
Reasons for the turmoil in the market
Now we can see all these factors in one place, which led to this decline:
| Key Factor | Impact |
| US Fed’s rate outlook | US Fed’s slower rate cuts caused global markets to panic. |
| Foreign capital outflows | FIIs sold shares worth ₹8,000 crore, leading to further selling pressure. |
| Rupee at record low | Rupee weakness increased inflation and discouraged foreign investments. |
| Macroeconomic concerns | Record trade deficit and slowing GDP growth raised investor concerns. |
| Earnings uncertainty | Poor Q1 and Q2 earnings led to doubts about recovery in Q3 and Q4. |
What to do now?
If you are thinking of selling your investments in panic amid this decline, then stop! This is just a fluctuation. If you are a long-term investor, then these market fluctuations can be an opportunity for you. But if you are a small investor, then talk to your financial advisor before making any investment decision.
Conclusion Such a decline in the stock market is natural, but this is not a reason to panic. There are many reasons for this, and there is something hidden behind every reason. Just keep in mind to understand the fluctuations of the market, take the right decision at the right time, and be patient. If you have invested at the wrong time, then do not panic, because after every decline there is also a correction.
