Stock markets crashed nearly 3% on August 5 due to across-the-board selling in banking, IT, metal and oil & gas shares following a global equity rout, wiping out more than ₹15 lakh crore of investor money in a single day.

The 30-share BSE Sensex plummeted 2,222.55 points or 2.74% to settle at over a month’s low of 78,759.40, marking its worst single-day retreat since June 4, 2024. During the day, the index tanked 2,686.09 points or 3.31% to 78,295.86.

The NSE Nifty slumped 662.10 points or 2.68% to settle at more than a month’s low of 24,055.60. During the day, it tumbled 824 points or 3.33% to 23,893.70. Nifty also saw its worst single-day fall since June 4, 2024, when markets crashed more than 5% due to general election results.

Sensex and Nifty had declined more than 1% in the previous session on August 2. In two sessions to August 5, the key indices have corrected around 4%.

Investors lost more than ₹15 lakh crore in the market crash as the total valuation of BSE-listed companies dropped to ₹441.84 lakh crore on August 5. Investors lost ₹4.46 lakh crore on August 2, taking the total losses in two days to more than ₹19 lakh crore.

In the broader market, the BSE smallcap gauge dropped 4.21% and midcap index plummeted 3.60%.

An over 12% plunge in Japan’s Nikkei and geopolitical tensions in the Middle East dented market sentiment, analysts said.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled sharply lower.

Japan’s benchmark stock index plunged 12.4% on August 5, compounding a global market rout set off by investor concerns that the U.S. economy could be headed for recession.

A report on August 2 showing hiring by U.S. employers slowed last month by much more than expected convulsed financial markets, vanquishing the euphoria that had taken the Nikkei 225 to all-time highs of over 42,000 in recent weeks.

On August 5, the Nikkei closed down 4,451.28 points at 31,458.42. It had dropped 5.8% on August 2, making this its worst two-day decline ever. Its worst single-day rout was a plunge of 3,836 points, or 14.9%, on October 19, 1987, a global markets crash that was dubbed “Black Monday” but proved to be only a temporary setback despite fears it might have augured a worldwide downturn.

European markets were also trading with deep cuts. The U.S. markets ended significantly lower on August 2.

From the Sensex pack, Tata Motors slumped over 7%. Adani Ports, Tata Steel, SBI, Power Grid, JSW Steel and Maruti were the other big laggards.

However, Hindustan Unilever and Nestle ended in positive territory.

“The global markets were jolted into a cautious mode by recessionary fears in the U.S. following disappointing job statistics and unwinding of carry trade following the rapid rise of the yen. The effects were felt by the domestic market as well and are expected to impact in the near term,” said Mr. Vinod Nair, Head of Research, Geojit Financial Services.

Foreign institutional investors (FII) offloaded equities worth ₹3,310 crore on August 2, according to exchange data.

“The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the U.S. after extremely poor jobs data, which spooked market sentiment,” said Santosh Meena, Head of Research, Swastika Investmart Ltd. 

All indices ended lower. Services index nosedived 4.56%, utilities tanked 4.30%, realty by 4.25%, capital goods by 4.13%, industrials by 4.08%, power by 3.91%, oil & gas by 3.88% and commodities by 3.82%.

“Nifty fell more than 2.6% driven by global sell-off post signs of U.S. recession setting in and rise in interest rates in Japan. A disappointing job scenario in the U.S. coupled with the fear of a reverse Yen carry trade, following an interest rate hike in Japan, led Asian markets to plunge on August 5 with Nikkei falling more than 12%.

“European stocks fell, extending last week’s decline amid a deepening global rout in equities and a rotation away from the technology shares that have powered this year’s rally,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“The Bank of Japan’s rate hike has significantly impacted global markets, causing the market to reconsider the financial landscape. Additionally, renewed speculation about a long-anticipated U.S. recession has emerged, partly due to a slightly higher-than-expected unemployment rate,” Vikas V. Gupta, CEO & Chief Investment Strategist, OmniScience Capital, said.

A total of 3,414 stocks declined while 664 advanced and 111 remained unchanged on the BSE.

Global oil benchmark Brent crude declined 1.93% to $75.33 a barrel.