Equity investors suffered an erosion of Rs 13 lakh crore in market valuation in two days of crash in the BSE benchmark Sensex which lost over 2 per cent during this period
Mumbai: The Indian stock market closed on a bearish note on Wednesday with significant declines across major indices.
The Sensex fell by 984 points or 1.25 per cent to settle at 77,690, while the Nifty dropped 324 points or 1.36 per cent to close at 23,559.
This week so far, Sensex was down 1,795 points or 2.26 per cent and Nifty was down 589 points or 2.44 per cent.
Equity investors suffered an erosion of Rs 13 lakh crore in market valuation in two days of crash in the BSE benchmark Sensex which lost over 2 per cent during this period.
Retail inflation soaring to a 14-month high of 6.21 per cent in October, unabated foreign fund outflows and muted quarterly earnings are the major reasons behind the heavy correction in the markets, traders said.
The BSE benchmark tanked 1,805.2 points or 2.27 per cent in two days. On Wednesday, it slumped 984.23 points or 1.25 per cent to settle at 77,690.95.
The market capitalisation of BSE-listed companies eroded by Rs 13,07,898.47 crore to Rs 4,29,46,189.52 crore (USD 5.09 trillion) in two days.
Retail inflation breached the Reserve Bank’s upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices.
“With inflation once again rising sharply and breaching above the RBI’s comfort level, receding hopes of any major rate cuts in the near future by the central bank put the markets into a tizzy.
“Also, relentless FII selling in local equities, along with rising US bond yields and dismal corporate earnings show has prompted overseas investors to park their funds in relatively cheaper markets like China,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, said.
From the 30-share Sensex pack, Tata Steel, Mahindra & Mahindra, Adani Ports, State Bank of India, JSW Steel, HDFC Bank, IndusInd Bank, Kotak Mahindra Bank, Reliance Industries and Bajaj Finserv were the biggest laggards.
NTPC, Tata Motors and Infosys were the gainers.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,024.31 crore on Tuesday, according to exchange data.
The BSE smallcap gauge tanked 3.08 per cent and midcap slumped 2.56 per cent.
All sectoral indices ended lower. Realty tumbled 3.23 per cent, industrials (2.95 per cent), capital goods (2.72 per cent), services (2.54 per cent), metal (2.54 per cent) and commodities (2.45 per cent).
A total of 3,299 stocks declined while 670 advanced and 98 remained unchanged on the BSE.
“Nifty has experienced its first significant correction in terms of both time and price since March 2023. This sell-off was sparked by China’s new stimulus package, which has diverted FII flows from India to China. Additionally, weaker-than-expected Q2 earnings from Indian companies, particularly in the consumption sector, have further intensified FII selling, leading to record outflows from Indian equities over the past month and a half.
“Adding to these pressures are rising US bond yields and a strengthening dollar index, both of which pose challenges for emerging markets like India,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.
Sectors such as Metal, auto and banking faced substantial selling pressure, contributing to the overall market decline.
Due to the decline, the market cap of all the companies listed on the Bombay Stock Exchange (BSE) has declined by about Rs 6 lakh crore which now stands at Rs 430 lakh crore.
Along with large-cap, selling pressures were seen in the smallcap and midcap stocks. The Nifty Midcap 100 index was down 1,456 points or 2.64 per cent at 53,800 and the Nifty Smallcap 100 index was down 532 points or 2.96 per cent at 17,458.
Twenty-seven out of 30 Sensex stocks closed in the red.
M&M, Tata Steel, JSW Steel, IndusInd Bank, Kotak Mahindra, HDFC Bank, Reliance Industries, SBI, Bajaj Finserv, Axis Bank, ICICI Bank and L&D were the top losers. NTPC, Tata Motors and Infosys were the gainers.
Vikram Kasat from Prabhudas Lilladher said that the decline marked the indices’ fifth straight session of losses amid persistent selling pressure from foreign institutional investors (FIIs), with broader market sentiment hampered by a confluence of factors shaking investor confidence.
“This latest downturn was intensified by sustained foreign investor outflows, disappointing corporate earnings, and rising inflation,” Kasat added.
Mandar Bhojane, Research Analyst at Choice Broking said, “On the technical front, a Bearish Engulfing pattern formed on the daily chart, highlighting the increased influence of bearish sentiment. The immediate support level is situated at 23,650; if this level is breached, the index may slip further to 23,400. On the upside, resistance remains robust, with selling pressure expected around the 24,200 mark.”