Sensex Crash Reason: What went wrong in India's stock market as Rs 13 lakh crore wiped off

Multiple factors have contributed to the Sensex crash. The first one being is SEBI's stress test.

Trending Sensex Crash Reason Sensex Crash Reason Explained

Indian stock market on Wednesday witnessed a massive bloodbath as Sensex witnessed a massive crash whipping off approximately Rs 13 lakh crore in a single day. As per reports, Sensex is trading at the level of 72,550 with a fall of more than 1100 points. At the same time, Nifty has also fallen by more than 350 points. It is trading at the level of 21,960. Smallcap and midcap indices are also in decline today (March 13). Smallcap index is trading at the 40,550 level, falling by more than 2200 points. There is a fall of more than 1,800 points in midcap. It has come to the level of 37,420. Out of 30 Sensex stocks, 27 are showing a decline and 3 are seeing a rise. Jet Airways shares have hit the upper circuit of 5% for the second consecutive day. It is trading at Rs 45.20, up Rs 2.15 (5.00%). Now, the question arises what is Sensex crash reason? Below is what we know so far- 


What is the Sensex Crash reason?


As per reports, multiple factors have contributed to the Sensex crash. The first one being is SEBI's stress test. SEBI Stress Test could be a major reason for the crash as Sebi chairperson Madhabi Puri Buch put out a froth warning on small-caps and midcaps. After the market regulator asked mutual funds last month to put in place a system to protect interests of smallcap and midcap investors, Madhabi Puri Buch was quoted saying, "There are pockets of froth in the market. Some people call it a bubble, some may call it froth. It may not be appropriate to allow that froth to keep building."


Following SEBI's warning, ICICI Prudential Mutual Fund reportedly temporarily suspended fresh subscriptions via lumpsum mode to smallcap and midcap funds. 


It is pertinent to mention here that on March 12, a rise was seen in the stock market. The Sensex was closed at 73,667 with a gain of 165 points. There was also a rise of 3 points in Nifty. It closed at the level of 22,335. On March 13, 2024, the Nifty was closed below 22,000 and Sensex was closed at 72,761.89.