Sensex crash wipes out Rs.7 lakh crore of investors’ wealth

INVstocrachThe BSE Sensex fell 1.625 points, 6.5 per cent – its biggest fall since 2009. The crash wiped out Rs.7 lakh crore of investor wealth, and the rupee sank to a two-year low of 66.74 per dollar.

The situation was the result of the rout in Chinese equities as Shanghai closed 8.75 percent lower, marking their biggest single day loss since 2007. More than $5 trillion has been erased from the value of world stocks since China devalued the yuan.

Oil & Natural Gas Corp and Vedanta Ltd sank the most since 2008. Tata Steel Ltd dropped its steepest in some 7 years. Reliance Industries Ltd fell to a five month low. As many as 280 of the 662 companies on the index crashed by 10 to 25%.

The Reserve Bank of India Governor said India is better off than other emerging market economies as the macro economic problems are under control and low inflation will give investors trust in markets. To soothe investors the central bank will use reserves to reduce the volatility in currency.

Analysts say foreign funds have started selling shares because of the rupee fall.