Investors lose a staggering Rs 6 lakh crore as Sensex plunges 873 points

The Indian stock market faced a sharp decline on May 20, with the Sensex dropping 873 points amid global uncertainties and profit booking. This sell-off resulted in a staggering loss of over Rs 6 lakh crore in investor wealth, highlighting the market's vulnerability to external pressures.

Sources:
LivemintM+14
Updated 1h ago
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Sources: LivemintBusinesstodayEconomictimes+3
Investors faced a staggering loss of Rs 6 lakh crore as the BSE Sensex fell 873 points, or 1.06%, to close at 81,186.44 on May 20, 2025. The decline was attributed to a mix of weak global signals, profit booking, and rising concerns over Covid-19 cases in India.

The market's downturn was exacerbated by Moody's downgrade of the US government's credit outlook, which triggered a sell-off in US equities and heightened fears of fiscal instability. Vinod Nair, Head of Research at Geojit Investments, noted, "With the lack of major positive triggers and prevailing uncertainty over U.S. fiscal stability, investors opted for profit-booking and adopted a cautious stance."

The BSE market capitalisation fell from nearly ₹444 lakh crore to ₹438 lakh crore, reflecting a significant erosion of investor wealth. Sector-wise, the Auto sector was particularly hard hit, with the Nifty Auto index plunging 2.17%. All sectoral indices closed in the red, indicating widespread selling across the board.

Market analysts suggest that the current Nifty PE ratio of 22.3, the highest in six months, indicates limited upside potential, prompting caution among institutional investors. Foreign Institutional Investors (FIIs) also turned net sellers, offloading equities worth ₹525.95 crore on May 19, 2025, further contributing to the market's decline.

As investors await clarity on the India-US trade deal and other economic indicators, the market sentiment remains bearish, with expectations of continued volatility in the near term.
Sources: Livemint
Investors lost approximately Rs 6 lakh crore as the BSE Sensex plunged 873 points, or 1.06%, closing at 81,186.44 on May 20, 2025. The decline was driven by weak global cues, profit booking, and concerns over rising Covid-19 cases and US fiscal stability.
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The Headline

Market plunges amid global uncertainties

With the lack of major positive triggers and prevailing uncertainty over U.S. fiscal stability, investors opted for profit-booking and adopted a cautious stance.
Vinod Nair
Head of Research
LivemintBusinesstodayEconomictimes+2
Key Facts
  • Sensex closed down 873 points, or 1.06%, at 81,186.44, while Nifty dropped 261.55 points to 24,683.90.Livemint
  • Investors lost over Rs 6 lakh crore in a single session due to widespread selling, as the cumulative market capitalisation of BSE-listed firms dropped to nearly Rs 438 lakh crore.Samco
  • Indian stock markets experienced significant selling pressure, with the Sensex falling 850 points in intraday trading before closing lower.1
  • The decline in the Sensex was attributed to weak global signals, profit booking, and cautious sentiment from institutional investors.1
  • US Treasury yields firmed up after Moody's downgraded the US government's credit rating, contributing to the market's decline.Newindianexpress
  • Profit booking was prevalent as investors reacted to global uncertainties and the lack of major positive triggers.Businesstoday2
Key Stats at a Glance
Points lost by Sensex
873
Livemint
Points lost by Nifty
262
Livemint
Loss in market capitalization
₹6 lakh crore
Livemint
Market capitalization after decline
₹438 lakh crore
Livemint
Market capitalization before decline
₹444 lakh crore
Livemint

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Background Context

Context of market decline

Key Facts
  • US Futures fell, indicating a likely weak trade on Wall Street, which contributed to the negative sentiment in Indian markets.1
  • The tariff policy in the US has raised concerns about the future of global trade, impacting investor sentiment.1
  • Emerging Markets are expected to be affected by a slowdown in the US economy, as noted by market experts.1
  • The Covid-19 situation in India has also contributed to market jitters, with a sudden increase in cases.2Equitymaster
  • Market experts highlight that elevated valuations in the domestic market are capping potential rises.Equitymaster1
Key Stats at a Glance
Active Covid-19 cases in India
257
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