The stock market witnessed a crash on Monday that left the Dalal Street bleeding as investors’ wealth declined significantly. The week began with heavy selling pressure, dragging all sectoral indices into the red.
Concerns over the HMPV virus and foreign institutional investors (FIIs) pulling out funds triggered a massive sell-off, leaving the Sensex and Nifty both over 1.5% lower. The S&P BSE Sensex plunged 1,258.12 points to close at 77,964.99, while the NSE Nifty50 dropped 388.70 points to end at 23,616.05.
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Nifty PSU Bank bore the brunt, plummeting by 4%, marking its worst performance since June 2024. Nifty Metal and Nifty Realty followed with losses of 3.14% and 3.16%, respectively.
Broader market indices also suffered sharp declines. Nifty Smallcap100 plunged 3.20%, while Nifty Midcap100 fell by 2.70%. Meanwhile, the India VIX, a measure of market volatility, spiked 15.58%, reflecting investor anxiety. The market fall marked one of the steepest single-day declines in recent months.
REASON FOR MARKET CRASH
“The sell-off was largely attributed to continued foreign institutional investor (FII) outflows and confirmation of HMPV cases in India coincided with reports of a virus outbreak in China, leading to heightened investor caution,” said Vaibhav Vidwani, Research Analyst at Bonanza.
Analysts also pointed to other factors that contributed to the market crash. Among these were weak business updates from key sectors, particularly banks and FMCG companies, and concerns over tightening liquidity in the banking sector.
“The main concern of the market pressure has been the firms’ poor business updates, particularly those from banks and FMCG stocks. The banking sector is currently navigating a landscape of tightening liquidity and slowing deposit growth. A stronger dollar and ongoing FPI selling have made the market decline worse. The strength of the US dollar and rising bond yields created a challenging environment for emerging markets,” said CA Jashan Arora, Director, Master Trust Group.
WHAT TO EXPECT TODAY
Market volatility is expected to persist on Tuesday, fuelled by ongoing concerns over the HMPV virus, upcoming corporate earnings reports, and macroeconomic factors such as the Union Budget and global trade policy shifts.
Ajit Mishra, SVP, Research at Religare Broking Ltd, highlighted the challenges ahead and said, “The pullback in the Nifty index, coupled with a spike in volatility (India VIX), has disrupted the recovery trend, signalling potential challenges ahead. The banking sector’s recent underperformance, combined with weakness in the midcap and smallcap segments, has intensified the bearish sentiment.”
He further added that the pharma and healthcare sectors are expected to maintain their resilience, while other sectors may continue to face downward pressure.
“We can expect Nifty to gain support between 23,470 and 23,200 and notice resistance between 23,650 and 23,720 in the next intraday session. Notably, the overall sentiment will remain bearish, and we could expect the price to test the 22,900 level. In this situation, I suggest adopting a sell-on-rise approach while short-term and mid-term investors should continue to hedge their positions,” said VLA Ambala, Co-Founder of Stock Market Today.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)