New Delhi: Stock markets across the world fell heavily on Monday. Japan's Nikkei 225 experienced the biggest fall since 1987. Nikkei closed at 31,458.42 with a fall of 12.40 percent i.e. 2227.15 points. Whereas, in 1987 Nikkei had fallen by 4451.28 points in a single day. It is called Black Day in terms of stock market. If we talk about India, then today Sensex and Nifty both had fallen by more than 3 percent at one point. However, there was some recovery in them later.

Let us know why there was such a huge decline in the Indian stock market and how much loss the investors suffered.

Risk of recession in America

After the unemployment figures in the US came in weaker than expected, many experts are expressing fears of recession. Big American investors like Warren Buffett have increased their cash reserves by selling heavily in July. The presidential election in the US has also increased political uncertainty. Due to all these factors, there was a big fall in the US stock market on Thursday and Friday, the effect of which was seen on markets across the world today.

• Iran–Israel tensions

Tensions between Iran and Israel are constantly increasing. Many reports are claiming that Iran is planning an attack on Israel along with its allies. Crude oil may be most affected by this crisis. Also, there is a risk of increasing trade uncertainty. Due to this, the morale of Indian investors has also weakened.

• Japan's Yen Crisis

Due to low interest rates in Japan, many traders borrowed Japanese Yen, converted it into US dollars and bought American stocks with it. But now the Bank of Japan has increased the interest rates. This has strengthened the Yen against the dollar. This means that traders will have to pay more interest on the borrowed Yen, and they are also facing huge foreign exchange losses. Due to this, they are selling, which is affecting the markets around the world.

• Overvaluation of the market

Last week, the valuation of the Indian stock market reached a record high of 150 percent of the GDP ratio. Experts say that liquidity is constantly flowing into the Indian stock market. This means that investors, especially retail investors, are constantly investing money. Due to this, many mid and small cap stocks have become overvalued. This is also a major reason for the fall in the stock market, which is also called correction.

•  Weak corporate results

The quarterly results of most of the companies in the country were weaker than expected, while the valuation of their stocks was high. To prove the valuation reasonable, the companies needed to give strong results. When this did not happen, the enthusiasm of the investors started to cool down. Now the investors do not have any new trigger point due to which they can invest money in the stock market.

Loss of Rs 10.24 lakh crore

On Monday, in the stock market tsunami, the market cap of all the companies listed on BSE has fallen drastically. Investors lost Rs 10.24 lakh crore. On Friday too, the stock market had fallen sharply. On that day, investors had lost Rs 4.56 lakh crore. Companies like Tata Motors, Tata Steel, Mahindra & Mahindra, Maruti Suzuki and JSW Steel have suffered the biggest blow. They have fallen by up to 6 percent.