In today’s article, we’ll dive into what caused the Indian stock market crash on October 03, 2024, and how it led to some significant stock losses.
Not only will we unravel the reasons behind the plunge, but we’ll also break down how specific stocks like Reliance, Axis Bank, and others were impacted. So, grab a comfy seat, and let’s decode what went wrong and what it means for investors!
What Sparked the October 03 Market Crash?
The Indian stock market isn’t unfamiliar with fluctuations, but the crash on October 03, 2024, was different—it was sharp and swift, leading to widespread panic across investors. Two main catalysts contributed to this massive fall: geopolitical tensions and a regulatory change by SEBI.
1. Escalation of Conflict Between Israel and Iran
The world was shocked on October 01 when Iran fired over 200 ballistic missiles at Israel in retaliation for the assassination of Hezbollah’s chief Nasrallah and his son-in-law. This aggressive escalation sparked concerns about the broader impact of a possible war in the Middle East.
What Sparked the October 03 Market Crash?
The Indian stock market isn’t unfamiliar with fluctuations, but the crash on October 03, 2024, was different—it was sharp and swift, leading to widespread panic across investors. Two main catalysts contributed to this massive fall: geopolitical tensions and a regulatory change by SEBI.
1. Escalation of Conflict Between Israel and Iran
The world was shocked on October 01 when Iran fired over 200 ballistic missiles at Israel in retaliation for the assassination of Hezbollah’s chief Nasrallah and his son-in-law. This aggressive escalation sparked concerns about the broader impact of a possible war in the Middle East.
Global investors braced for an oil price surge as West Asia is a crucial hub for oil production. Higher oil prices typically lead to increased inflationary pressures, a scenario that Indian investors feared would destabilize both the economy and markets.
2. SEBI’s New F&O Regulations
At the same time, the Securities and Exchange Board of India (SEBI) introduced changes in the derivatives market, announcing that weekly expiries would be limited to just one benchmark index starting from November 20, 2024.
2. SEBI’s New F&O Regulations
At the same time, the Securities and Exchange Board of India (SEBI) introduced changes in the derivatives market, announcing that weekly expiries would be limited to just one benchmark index starting from November 20, 2024.
This change spooked investors, especially those involved in Futures and Options (F&O) trading. With reduced trading opportunities in derivatives, the sentiment took a further hit.
These two events combined to create the perfect storm, sending Sensex tumbling over 1,769 points, and Nifty dropping by 546 points, making it the third-largest one-day market fall in 2024.
These two events combined to create the perfect storm, sending Sensex tumbling over 1,769 points, and Nifty dropping by 546 points, making it the third-largest one-day market fall in 2024.
Key Stocks That Took the Biggest Hits
Now, let’s take a closer look at five stocks that were hit hardest during this downturn. While the entire market was painted red, some companies suffered more than others, pulling the indices further down.
1. Reliance Industries (RIL)
Reliance Industries was one of the biggest contributors to the market’s downfall, continuing its downward trend for three consecutive days. On October 03, the stock plunged by more than 4% and has witnessed an overall decline of 8% over the last three sessions.
What made RIL’s fall particularly significant is its weight on Nifty 50, contributing to a 0.37% drop in the index alone. The uncertainty surrounding crude oil prices, given the escalating West Asia conflict, amplified the impact on the oil and gas giant.
2. Axis Bank
Axis Bank was another stock that took a heavy beating. Closing almost 4% lower on the day, its share price dropped to ₹1,178. Banking stocks, in general, were hit hard, as the Nifty Bank Index saw a drastic cut of 1,077.40 points, a loss of 2.04% by the end of the session.
The banking sector is often sensitive to global geopolitical developments, as it impacts credit, loans, and overall investor confidence. Axis Bank alone contributed 32 points to the Nifty’s decline.
3. Larsen & Toubro (L&T)
L&T, one of India’s leading engineering and construction companies, didn’t escape the market’s carnage. By the end of the session, L&T’s stock had fallen 4.6% in Nifty and 4.5% in Sensex, closing at ₹3,505.50.
Now, let’s take a closer look at five stocks that were hit hardest during this downturn. While the entire market was painted red, some companies suffered more than others, pulling the indices further down.
1. Reliance Industries (RIL)
Reliance Industries was one of the biggest contributors to the market’s downfall, continuing its downward trend for three consecutive days. On October 03, the stock plunged by more than 4% and has witnessed an overall decline of 8% over the last three sessions.
What made RIL’s fall particularly significant is its weight on Nifty 50, contributing to a 0.37% drop in the index alone. The uncertainty surrounding crude oil prices, given the escalating West Asia conflict, amplified the impact on the oil and gas giant.
2. Axis Bank
Axis Bank was another stock that took a heavy beating. Closing almost 4% lower on the day, its share price dropped to ₹1,178. Banking stocks, in general, were hit hard, as the Nifty Bank Index saw a drastic cut of 1,077.40 points, a loss of 2.04% by the end of the session.
The banking sector is often sensitive to global geopolitical developments, as it impacts credit, loans, and overall investor confidence. Axis Bank alone contributed 32 points to the Nifty’s decline.
3. Larsen & Toubro (L&T)
L&T, one of India’s leading engineering and construction companies, didn’t escape the market’s carnage. By the end of the session, L&T’s stock had fallen 4.6% in Nifty and 4.5% in Sensex, closing at ₹3,505.50.
Infrastructure companies are vulnerable to the knock-on effects of rising inflation and potential disruptions in global trade—two concerns that surfaced as oil prices looked set to surge.
4. Bharat Petroleum Corporation Limited (BPCL)
One of the most directly affected by potential oil price hikes, BPCL saw its shares drop by 5.5%. The stock hit an intraday low of ₹347 as crude prices jumped in response to rising tensions in West Asia. BPCL, being an oil marketing company, is highly sensitive to international crude prices.
4. Bharat Petroleum Corporation Limited (BPCL)
One of the most directly affected by potential oil price hikes, BPCL saw its shares drop by 5.5%. The stock hit an intraday low of ₹347 as crude prices jumped in response to rising tensions in West Asia. BPCL, being an oil marketing company, is highly sensitive to international crude prices.
Despite a 105% return over the last year, this latest geopolitical turmoil has left investors worried about the company’s ability to maintain its margins.
5. Shriram Finance
Shriram Finance, recently added to Nifty 50, took a sharp plunge of 4.7%, with the stock touching an intraday low of ₹3,400.30. The fall came shortly after the stock had reached a 52-week high in late September.
5. Shriram Finance
Shriram Finance, recently added to Nifty 50, took a sharp plunge of 4.7%, with the stock touching an intraday low of ₹3,400.30. The fall came shortly after the stock had reached a 52-week high in late September.
Financial companies, especially those engaged in lending, are directly impacted by inflation fears, which could reduce consumer demand for loans and hit margins hard.
Broader Market Performance and Sectoral Impact
The October 03 crash wasn’t limited to a few stocks. The broader markets also felt the pressure, with Nifty Midcap 100 and Nifty Smallcap 100 falling 2.21% and 1.96% respectively. Across the board, every sector closed in the red, but the banking and oil sectors bore the brunt of the sell-off.
The India VIX, a volatility index often considered a gauge of market fear, shot up by 10% to settle at 13.17. Higher volatility signals greater uncertainty, and this spike suggested that investors were worried about the future trajectory of the market, especially in light of ongoing geopolitical concerns.
Broader Market Performance and Sectoral Impact
The October 03 crash wasn’t limited to a few stocks. The broader markets also felt the pressure, with Nifty Midcap 100 and Nifty Smallcap 100 falling 2.21% and 1.96% respectively. Across the board, every sector closed in the red, but the banking and oil sectors bore the brunt of the sell-off.
The India VIX, a volatility index often considered a gauge of market fear, shot up by 10% to settle at 13.17. Higher volatility signals greater uncertainty, and this spike suggested that investors were worried about the future trajectory of the market, especially in light of ongoing geopolitical concerns.
The Geopolitical and Regulatory Outlook Moving Forward
While the geopolitical situation remains volatile, the future of the Indian stock market will largely depend on how the Israel-Iran conflict unfolds. Investors are keenly watching oil prices, as sustained increases could trigger higher inflation in India, impacting everything from fuel prices to the cost of goods.
At the same time, SEBI’s decision to limit F&O trading opportunities could result in lower volumes in the derivatives market, a key concern for institutional and retail investors alike. The reduction in trading flexibility may also lead to higher volatility in stocks and could amplify price swings in the near term.
Final Thoughts
Thanks for joining me on this journey through the October 03, 2024 Indian stock market crash. As we’ve explored, a mix of geopolitical turmoil and regulatory changes combined to create the perfect storm.
While the geopolitical situation remains volatile, the future of the Indian stock market will largely depend on how the Israel-Iran conflict unfolds. Investors are keenly watching oil prices, as sustained increases could trigger higher inflation in India, impacting everything from fuel prices to the cost of goods.
At the same time, SEBI’s decision to limit F&O trading opportunities could result in lower volumes in the derivatives market, a key concern for institutional and retail investors alike. The reduction in trading flexibility may also lead to higher volatility in stocks and could amplify price swings in the near term.
Final Thoughts
Thanks for joining me on this journey through the October 03, 2024 Indian stock market crash. As we’ve explored, a mix of geopolitical turmoil and regulatory changes combined to create the perfect storm.
Whether you're a seasoned investor or someone just keeping an eye on the market, understanding the reasons behind such crashes is crucial in navigating future market swings.
Remember, staying informed and consulting financial advisors before making any moves is always a wise decision. Until next time, happy exploring and safe investing!
Edited by Shivam Sharma
This article has been authored exclusively by the writer and is being presented on Eat My News, which serves as a platform for the community to voice their perspectives. As an entity, Eat My News cannot be held liable for the content or its accuracy. The views expressed in this article solely pertain to the author or writer. For further queries about the article or its content you can contact on this email address - shivamsharma658448@gmail.com
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