Investors suffered massive losses on Monday as the stock market plummeted, wiping out ₹10.98 lakh crore in market wealth. Concerns over weak third-quarter results, continuous foreign fund withdrawals, and a new virus scare rattled market sentiment.
Market Performance
The BSE Sensex, a key benchmark index, fell sharply by 1,258.12 points or 1.59%, closing at 77,964.99, dropping below the crucial 78,000 mark. During the day, it touched its lowest point at 77,781.62, registering a total intraday loss of 1,441.49 points or 1.81%.
The NSE Nifty also faced significant declines, sliding 388.70 points or 1.62%, to end at 23,616.05.
The overall market capitalization of all BSE-listed companies dropped to ₹4,38,79,406.58 crore (around $5.11 trillion), down by a massive ₹10.98 lakh crore.
Sectoral and Stock Movements
All BSE sectoral indices ended in the red, with utilities, power, and services hit hardest.
- Top Losers: Tata Steel, NTPC, Kotak Mahindra Bank, Power Grid, Zomato, Adani Ports, IndusInd Bank, Asian Paints, ITC, and Reliance Industries saw heavy losses.
- Top Gainers: Titan, HCL Tech, and Sun Pharma managed to stay in the green despite the market crash.
The BSE smallcap index fell 3.17%, while the midcap index declined 2.44%. Utilities led the losses with a 4.16% drop, followed by power (-3.73%), services (-3.45%), and metal (-3.15%).
Overall market breadth was highly negative, with 3,474 stocks declining, 656 gaining, and 114 remaining unchanged.
Key Factors Driving the Market Decline
1. HMPV Virus Scare
A new virus, HMPV (Human Metapneumovirus), has raised fears of an economic slowdown.
- Two cases were detected in Karnataka by the Indian Council of Medical Research (ICMR).
- Reports of rising cases in China and Malaysia have further fueled panic.
- State governments in India, including Maharashtra and Karnataka, issued precautionary guidelines.
While the virus’s fatality rate is lower than COVID-19, uncertainty surrounding its economic impact has caused panic among investors.
2. Foreign Institutional Investor (FII) Selling
FIIs have sold over ₹4,500 crore worth of stocks in January, citing unattractive valuations in Indian markets.
Experts believe that continued FII outflows will persist until macroeconomic and microeconomic growth rates improve in India.
3. Weak Earnings Expectations
Muted third-quarter business updates, especially from banks and FMCG companies, have dampened investor confidence.
- HDFC Bank, a key Nifty stock, reported 15.8% growth in deposits but only 3% growth in loans, leading to a 2.2% drop in its stock price.
- Analysts predict subdued earnings for Q3 and Q4, with broader concerns over FY26 earnings growth.
4. Weak Global Cues
Global factors have added pressure to Indian markets:
- A strong US dollar index at 109 and a 10-year US bond yield of 4.62% have made Indian markets less attractive to global investors.
- Rising US bond yields indicate tighter liquidity conditions, leading to increased FII outflows.
5. Sectoral Weakness
Banking, metals, realty, and FMCG sectors led the market decline:
- Nifty PSU Bank fell by 3.63%.
- Nifty Metal dropped 2.98%, and Nifty Realty declined 2.77%.
Market Outlook
Market volatility is expected to persist in the near term due to several upcoming events, including:
- Corporate earnings reports.
- The upcoming Union Budget.
- Global trade policies.
Experts remain cautious but believe that the current sell-off is driven more by short-term sentiment than long-term fundamentals.
Manish Chowdhury, Head of Research at StoxBox, noted, “While the HMPV scare is causing panic, its actual economic impact appears limited compared to COVID-19. Investors should focus on broader earnings and economic recovery trends.”
With the recent sell-off, markets may await stronger positive triggers to regain momentum. Until then, investors are advised to tread cautiously.
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