$279 billion wiped out in a day for Nvdia; What’s next? | Weekly Update September 6th
Hello Readers!
One of the biggest talks of town is the latest upheaval at Nvidia -the chip giant that’s been making headlines for all the wrong reasons recently. In a single trading day, the company’s market capitalization plummeted by a staggering $279 billion, sending shockwaves through the financial markets. Let’s dissect the reasons behind this dramatic decline right after some market highlights of the week that was.
🧾In this Article
Cover story: $279 billion wiped out in a day for Nvdia; What’s next?
📈 Weekly Market Wrap-up
This week wasn’t exactly smooth sailing for the markets. The NIFTY index slipped by 383.75 points, landing at 24,852.15, which means it fell by 1.52% from last week’s close. Over on the SENSEX, the decline was even more pronounced, with a drop of 1,181.84 points, bringing it down to 81,183.93—a 1.43% decrease.
In the banking sector, the BANKNIFTY also took a hit, falling by 774.15 points to settle at 50,576.85, marking a 1.51% drop. The NIFTY MIDCAP 100 followed suit with a 1.32% decline, down by 784.70 points, and ending the week at 58,501.95.
Interestingly, the NIFTY SMALLCAP 100 was the least affected, with just a slight dip of 31.05 points, closing at 19,276.05. That’s a tiny 0.16% drop from the previous week.
So, in summary, it’s been a week of red across the board, with all the major indices showing losses. Here’s hoping for a more positive turn in the coming week!
Sector Spotlight
The benchmark indices, BSE Sensex and Nifty 50, registered gains of 75.42 points (0.33%) and 290.28 points (0.67%), respectively.
Key sectoral indices witnessed varying trends. The IT index outperformed, gaining 640.68 points (1.47%). In contrast, the Consumer Goods and Capital Goods indices declined by 2025.97 points (2.77%) and 1.47%, respectively.
Nifty 100 Top gainers
- SBI Cards And Payment Services Ltd.= 800.65 (▲11.0%)
- Hero MotoCorp Ltd.= 5,743.75 (▲6.9%)
- Bajaj Holdings & Investment Ltd.= 10,693.40 (▲6.3%)
- Avenue Supermarts Ltd.= 5,303.45 (▲5.9%)
- Bajaj Finserv Ltd.= 1,857.15 (▲5.5%)
Nifty 100 Top losers
- Coal India Ltd.= 488.55 (▼7.4%)
- Tata Motors Ltd.= 1,049.35 (▼6.4%)
- Oil & Natural Gas Corporation Ltd.= 308.80 (▼6.3%)
- Canara Bank= 103.38 (▼6.3%)
- Indian Railway Finance Corporation Ltd.= 169.85 (▼5.6%)
FII and DII Activity:
Over the week, FIIs were net buyers, purchasing a total of ₹11,838.14 crore worth of Indian equities. This indicates that FIIs were more optimistic about the Indian market during this period. DIIs) were net sellers, selling a total of ₹3,802.15 crore more than they bought..
| Date | FII Net Activity | DII Net Activity |
| 26-AUG-24 | ₹483.36 cr | ₹1,870.22 cr |
| 27-AUG-24 | ₹1,503.76 cr | -₹604.08 cr |
| 28-AUG-24 | -₹1,347.53 cr | ₹439.35 cr |
| 29-AUG-24 | ₹3,259.56 cr | ₹2, 690.85 cr |
| 30-AUG-24 | ₹ 5,318.14 cr | ₹ 3,198.07 |
| Total | ₹ 9,217.29 cr | ₹1,198.27 cr |
Global Gossip
In the US, the Dow Jones and S&P 500 recorded slight gains, with the Dow Jones up 0.94% and the S&P 500 up 0.24%, indicating a generally bullish sentiment. However, the Nasdaq fell by -0.92%, suggesting some uncertainty in the technology sector. In Europe, the FTSE and CAC indices both saw modest gains, with the FTSE up 0.59% and the CAC up 0.71%. The DAX too saw a weekly increase of 1.47%. The Nikkei 225 up 0.74%, the Straits Times up 1.62%, the Hang Seng up 2.14%, and the Jakarta Composite up 1.68%. However, the KOSPI and Shanghai Composite experienced declines, with the KOSPI down -1.01% and the Shanghai Composite down -0.43%
Rupee Report
The Indian Rupee (INR) depreciated slightly against the US Dollar (USD) this week. The USDINR spot rate closed at 83.84 on August 31, 2024, down from 83.9 the previous day. This represents a weekly decline of 0.06 points or 0.07%.
Gold Surges
Gold prices have surged by 4.82% in the past week, indicating a strong bullish trend. Conversely, Brent Crude and Crude Oil futures have both declined, suggesting a bearish outlook. Brent Crude is down 5.06%, while Crude Oil has fallen by 4.59%. These figures are based on data from August 31, 2024.
🍟 Quick Bites
🚗 Total automobile sales increased by 2.88% year-on-year in August, with passenger vehicle sales decreasing by 4.53%, 2-wheeler sales increasing by 6.28%, and commercial vehicle sales decreasing by 6.05% (FADA).
🏦 Kotak Mahindra Bank topped the S&P Global Market Intelligence ranking of Indian banks, with Bank of Maharashtra being the only public-sector bank in the top 10.
📝 The Tamil Nadu government signed an MoU with Trilliant Networks to set up a manufacturing unit in Tamil Nadu with an investment of ₹2,000 crore.
✈️ Air India became the first Indian airline to adopt NDC, a technology introduced by IATA to improve coordination between airlines and ticket vendors.
🔋 The Defence Ministry approved 10 capital acquisition proposals worth ₹1.45 lakh crore for tanks and radars.
📈 Premier Energies IPO listed with a 120% premium, closing at ₹990 on NSE and ₹991 on BSE compared to the offer price of ₹450.
🚧 The Ministry of Road Transport plans to build 74 new tunnels at a cost of ₹1 lakh crore over the next five years.
📞 Telecom service providers in India blacklisted over 50 entities and disconnected more than 2.75 lakh mobile numbers due to spam.
🔧 Air India started construction of a maintenance, repair, and overhaul facility at Bengaluru airport with an investment of ₹1,400 crore.
📊 India’s services sector growth (PMI) remained unchanged in August at 60.9, while the manufacturing output growth (PMI) was 57.5.
🏭 The central government approved a new semiconductor manufacturing plant in Sanand, Gujarat, with an investment of ₹3,300 crore.
💰 India’s GST collection rose 10% year-on-year to ₹1.75 lakh crore in August.
🌾 The central government approved 7 agricultural projects worth around ₹14,000 crore, including Digital Agricultural Mission, crop research and development, agri education, horticulture, and more.
🔎 Stocks in news
📈 Reliance approved a 1:1 bonus issue and increased its authorized share capital.
🚂 RVNL commissioned Marathwada Rail Coach Factory in Latur.
💊 Glenmark Pharma settled a drug pricing dispute with the US Department of Justice for $25 million.
🏢 Prestige Estates raised ₹5,000 crore through a QIP.
🌬️ Linde India acquired Tata Steel’s industrial gas supply assets.
🧾 One-Idea (Vi) received a GST penalty of ₹73 crore.
💰 BPCL paid ₹2,413 crore in dividends to the government.
🏠 Prestige Estates subsidiary bought development rights in Pune for over ₹200 crore.
🏭 Reliance received government funding for manufacturing ACC under a PLI scheme.
📊 Adani Enterprises’ ₹400 crore debt issue was oversubscribed on the first day.
💸 The government will sell a stake in General Insurance for around ₹4,700 crore.
🔬 Natco Pharma invested in US-based biotech firm eGenesis Inc.
💵 Vedanta announced a third interim dividend of ₹20 per share.
⛏️ Coal India’s coal production fell 11.90% year-on-year in August.
⚡ Adani Energy acquired the Khavda transmission project from REC Power Development and Consultancy.
📈 NBCC approved a 1:2 bonus issue and received new orders worth ₹182.50 crore.
🏙️ Godrej Properties acquired two plots in Gurugram for housing development.
🔗 Gujarat Gas approved the merger of three subsidiaries.
🏆 NHPC, SJVN, and RailTel were granted ‘Navratna’ status.
♻️ Sustainability Corner
⚡ Adani Green formed a joint venture with TotalEnergies, with TotalEnergies investing $444 million.
🚀 IPO corner
Upcoming SME IPOs:
- Gajanand International Limited IPO (Sep 09 – Sep 16, 2024)
- Kross Limited IPO (Sep 09 – Sep 16, 2024)
- Shubhshree Biofuels Energy Limited IPO (Sep 09 – Sep 16, 2024)
- Share Samadhan Limited IPO (Sep 09 – Sep 16, 2024)
- Bajaj Housing Finance Limited IPO (Sep 09 – Sep 16, 2024)
- Tolins Tyres Limited IPO (Sep 09 – Sep 16, 2024)
- Aditya Ultra Steel Limited IPO (Sep 09 – Sep 16, 2024)
- PN Gadgil Jewellers Limited IPO (Sep 10 – Sep 17, 2024)
- SPP Polymer Limited IPO (Sep 10 – Sep 17, 2024)
- Trafiksol ITS Technologies Limited IPO (Sep 10 – Sep 17, 2024)
- Western Carriers (India) Limited IPO (Sep 13 – Sep 17, 2024)
- Envirotech Systems Limited IPO (Sep 13 – Sep 20, 2024)
- Excellent Wires and Packaging Limited IPO (Sep 11 – Sep 19, 2024)
- Innomet Advanced Materials Limited IPO (Sep 11 – Sep 18, 2024)
News:
📦 Boss Packaging Solution listed at ₹82.5 on NSE SME, a premium of 25% from the IPO price of ₹66.
🏦 The ₹6,560-crore IPO of Bajaj Housing Finance is likely to see marquee names like HDFC Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, GIC, Goldman Sachs Asset Management, and Morgan Stanley Asia participate as anchor investors.
📄 Bengaluru-based iValue Infosolutions filed preliminary papers with SEBI for an IPO consisting of only an offer-for-sale (OFS) component of 1.87 crore equity shares.
📈 Twelve IPOs, including four from the main board and eight from SMEs, are looking to raise over $1 billion or ₹8,600 crore in the coming week.
$279 billion wiped out in a day for Nvdia; What’s next?
Earlier this week, Nvidia’s stock took a nosedive, tumbling by a staggering 9.53% in a single day. This sharp drop marked the deepest single-day decline in market value ever recorded for a US company, with Nvidia’s market capitalization shrinking by a jaw-dropping $279 billion. Since its peak on June 18, Nvidia’s shares have lost roughly 20% of their value.
The Earnings Miss: What Went Wrong
The immediate trigger for Nvidia’s market collapse was its second-quarter earnings report. Although Nvidia reported revenue of $30.04 billion-beating estimates of $28.70 billion—the outlook failed to impress investors. The company’s forecast for the third quarter included an adjusted gross margin of 75%, slightly below the analysts’ expectation of 75.5%. Revenue expectations were set at $32.5 billion, which was a bit above the average analyst estimate of $31.77 billion.
Despite these figures, the failure to meet certain growth expectations, particularly in its data center business, led to disappointment.
Al Regulation Concerns: A Major Headache
Adding fuel to the fire is the increasing scrutiny over artificial intelligence (Al). The US Department of Justice has issued a subpoena to Nvidia, probing potential antitrust practices. Officials are concerned that Nvidia might be making it harder for customers to switch to other suppliers and penalizing those who don’t exclusively use its Al chips. This investigation was sparked by complaints from competitors about Nvidia’s market dominance.
Nvidia has denied any wrongdoing, asserting that it engages in fair competition. However, the increased regulatory scrutiny, including inquiries from South Korean regulators, adds a layer of uncertainty. Moreover, Nvidia’s substantial investments in other Al firms, such as its planned $100 billion investment in OpenAl, have further heightened regulatory concerns.
Broader Economic Uncertainties: The Bigger Picture
Nvidia’s troubles also reflect broader issues within the chip sector and the economy at large. The Wall Street chip index dropped 7% as investor optimism about the Al boom softened.
This decline is part of a larger trend, with the Nasdaq falling by 3% and the S&P 500 down by 1.9%. The broader market sell-off has impacted other tech giants as well, including Microsoft and Meta, which have also seen declines in their valuations due to worries about delayed returns on significant Al investments.
Comparing the Impact: Nvidia vs. Reliance Industries
To put Nvidia’s market cap drop into perspective, the $279 billion loss is almost equivalent to the entire market capitalization of Reliance Industries, one of India’s largest companies. Reliance, with a market cap of around $234 billion, is a major player in the Indian market. If Reliance were to lose its entire value, it would create significant shockwaves across the Indian stock market.
Implications for Investors: What Does This Mean for You?
For investors, Nvidia’s market cap crash underscores the volatility of tech stocks. Although Nvidia has been a standout performer, these sharp declines remind us of the risks involved in investing. If you hold Nvidia or similar tech stocks, it’s crucial to maintain a long-term perspective and be prepared for such market fluctuations.
What’s Next for Nvidia?
Nvidia will need to navigate a challenging landscape to regain investor confidence. Addressing regulatory issues, adapting to evolving market conditions, and continuing to innovate in Al will be key. The company’s future will depend on how well it can overcome these obstacles and deliver on its growth promises.
That’s the latest on Nvidia’s dramatic market cap drop. It’s been a turbulent period for the tech giant, but staying informed and keeping a broader perspective will help you understand these developments better.
Upcoming key financial events for the week:
| Date | Event |
| 10-Sep-24 | GBP Claimant Count Change |
| 11-Sep-24 | – USD GDP m/m
– USD Core PPI m/m – USD CPI y/y |
| 12-Sep-24 | – EUR Monetary Policy Statement
– USD Core CPI m/m – USD CPI y/y – USD Unemployment Claims – INR CPI (YoY) (Aug) – INR Industrial Production (YoY) (Jul) |
| 13-Sep-24 |
– INR WPI Inflation (YoY) (Aug)
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