- India’s Sensex and Nifty crashed on Monday, with Sensex falling over 1,000 points and Nifty dropping 300 points to levels last seen in May 2024.
- Foreign institutional investors (FIIs) sold $384.67 million in equities on Friday, far outpacing domestic buying and intensifying selling pressure.
- Brent oil surged above $106 per barrel, stoking fears of higher borrowing costs and inflation, while higher capital gains taxes have dampened retail investor sentiment.
India’s benchmark stock indexes Sensex and Nifty plunged sharply on Monday minutes after the opening bell, with Sensex losing more than 1,000 points and Nifty falling 300 points to hit their lowest levels since May 2024. The crash shocked retail investors, as most holdings remain in the red and the market has effectively stagnated for over two years.
The sell-off was driven by three key factors. First, Foreign Institutional Investors (FIIs) continued their aggressive selling, offloading $384.67 million worth of equities on Friday according to data from the NSE, while domestic institutions bought only $295.63 million, creating a net outflow of $89.04 million that spooked markets on Monday. Second, Brent crude oil rose 2.9% to hit $107 per barrel, reigniting fears of higher transportation and fuel costs that feed into broader inflation and borrowing expenses. Third, higher capital gains taxes imposed in July 2024 — Short Term Capital Gains (STCG) increased from 15% to 20% and Long Term Capital Gains (LTCG) from 10% to 12.5% — have eroded trader profits and dampened retail investor enthusiasm, as detailed by the Income Tax Department.
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