Sensex Falls 700 Points, Nifty Down 1.1% on October 8 — Rs 7 Lakh Crore Investor Wealth Erased

The Quick Take

• Sensex dropped nearly 700 points and Nifty fell 1.11% on October 8 in a broad market sell-off
• Over Rs 7 lakh crore in investor wealth was wiped out in a single session
• RBI repo rate hike, FII selling, and rising inflation concerns combined to trigger the rout

India's equity markets endured one of the sharpest single-day declines in months on October 8, with the confluence of the RBI's surprise rate hike, sustained FII outflows, and sticky inflation fears proving too much for bulls to absorb. The Rs 7 lakh crore wealth erosion in a single session underscores how quickly sentiment can shift when macro variables align against domestic markets.

The RBI's 25bp repo rate increase — the first hike in a four-year cycle that had previously cut 125bp — changed the narrative from easing to tightening. For equity investors, higher rates compress valuation multiples, raise the cost of capital for mid-cap and small-cap borrowers, and make fixed-income instruments relatively more attractive, creating near-term headwinds for broad indices.

FII selling has been relentless; foreign investors have now withdrawn roughly $30 billion from Indian equities this year. The rupee's 7% decline adds currency drag for USD-denominated funds, reducing appetite for re-entry even at lower levels. A sustained recovery will likely require either a pause in rate hikes or a meaningful reversal in FII flows.

Synthesized from 1 source.