Stock Market Crash: What caused the ₹9 lakh crore sell-off on Dalal Street?

Indian equity markets ended with steep cuts on Friday, February 28, in what has been a painful start to the March F&O series. The session saw a loss of ₹9 lakh crore in the overall market capitalisation of the listed companies on the Bombay Stock Exchange (BSE).The Nifty ended with cuts of over 400 points, while the Sensex fell over 1,400 points. The Midcap and Smallcap indices had their worst month since March 2020, declining 11% and 13% respectively in the month of February. The Nifty Smallcap index is down 25% so far from its December 2024 peak.

Multitude of factors can be attributed to why the markets are down in today’s trading session.

The sell-off in the US markets on Thursday night is a big factor for the market fall. The Nasdaq fell over 550 points, and although the Dow Jones ended 200 points lower, it corrected over 650 points from the sessions’ highs.The fall in the Nasdaq was triggered by a 8.5% drop in shares of Nvidia post its earnings. The Nasdaq sell-off has rubbed-off on the Nifty IT index, which is the top sectoral loser in today’s trading session, declining as much as 4%.

Additionally, US President Donald Trump confirmed that the 25% tariffs on Canada and Mexico will take effect on March 4, along with an additional 10% tariff on Chinese imports. Reciprocal tariffs will go on as per schedule on April 2.

“It’s not that the market has seen lower circuits, like in COVID and on Russia-Ukraine thing that happened it just went down 15% within a month. I think this one is really grinding one, and the last leg of it is always more painful. So, a lot of the stocks are now nearing COVID valuation levels. Some of the stuff – there’s some stability in some parts of the market. For example, if you see banks, you broadly see now at 48,000-49,000 bank nifty. Now there is valuation comfort. I have not seen bank nifty at 12.5 P/E and private bank nifty at 18% RoE. last time I saw that was probably 2008 so the valuations are sweet in financials,” Gurmeet Chadha of Complete Circle Capital told CNBC-TV18.

All sectoral indices are trading with losses in today’s session. Along with the Nifty IT, the Nifty Auto and Nifty Media indices are also trading with losses of over 2% each.