The Sensex crashed over 1,600 points or nearly 6 per cent today in early trade on Wednesday as Republican Donald Trump’s unexpectedly powerful performance in the US presidential elections spooked markets globally.
Investors’ wealth on Dalal Street, in market capitalisation of BSE listed firms, fell by nearly Rs 6 lakh crore from Rs 111 lakh crore to Rs 105 lakh crore.
The markets have swung wildly through the morning as results for the US election came in – the Sensex, after crashing 1,600 points recovered to about 550 points down and then again crashed about 1,000 points.
Donald Trump has won vital battleground states like Florida, North Carolina and Ohio and now has the edge on Democrat Hillary Clinton in their race for the White House.
The dollar sank and S&P futures sank 5 per cent as safe-haven assets rallied with investors running for cover, pushing the yen and gold higher.
In Asian markets, Japan’s Nikkei slumped nearly 5 per cent.
The crash in Indian markets has also been attributed by analysts to short-term disruption in the financial system caused by the government’s abrupt announcement on Tuesday evening that 500 and 1,000 rupee notes will be discontinued.
Nearly 40 per cent of India’s economy is driven by small- and medium-sized enterprises that largely run on cash transactions. Economists said Prime Minister Narendra Modi’s demonitisation move on Tuesday evening could impact these businesses, and in turn have a knock-on effect on economic growth.
PM Modi announced the withdrawal of Rs 500 and Rs 1,000 notes to crack down on black money and counterfeit currency.
