The domestic stock market continued to be in a tizzy on Wednesday, with both broad benchmark indices sliding about 1.3% to hit a five-month low by the end of trading in what marked the fifth successive day of decline valuations for Indian shares.
The 30-share S&P BSE Sensex slumped 1.25% or 984 points to close at 77,691 points, led by a drop in metal, auto and banking stocks, while the broader NSE Nifty 50 clocked a sharper plunge of 1.36% to end up at 23,559 points. But the battering was not limited to large corporates, with the BSE Midcap index seeing a steeper decline of 2.56% and the Smallcap gauge tanking 3.08%.
The Sensex stocks which lost the most included Tata Steel (3.40%), M&M (3.36%), Adani Ports (2.78%), State Bank (2.18%), JSW Steel (2.17%), and HDFC Bank (2.16%). The BSE Metal index was down 2.56%, Bankex was down 1.94% and BSE Auto index was down 2.26%.
Analysts attributed the decline to relentless selling pressure from foreign portfolio investors and a confluence of factors that have shaken investor confidence, including anxieties around the implications of newly re-elected US President Donald Trump’s economic policies, a surprising surge in domestic inflation, and insipid quarterly results from India Inc.
Deepak Jasani, head of retail research at HDFC Securities said the Nifty has officially entered correction territory with a 10% drop from its recent high.
Several companies have reported their weakest quarterly numbers in over four years, while foreign investors have pulled out about $14 billion from India since late September, pointed out Vikram Kasat, head of advisory at PL Capital, Prabhudas Lilladher.
“The correction reflects investors’ growing caution amid rich valuations and macroeconomic uncertainties, with both Nifty and Sensex falling to their respective five-month lows on Wednesday,” he said, adding that October’s retail inflation hitting a 14-month high of 6.21%, dampening hopes of an interest rate cut in the near future and damaging investor sentiment further.
Mr. Jasani noted that the increased cash market volumes on the NSE suggest that local investors are engaging in bottom-fishing activities. “However, the broad market indices have declined even more sharply than the Nifty, indicating a challenging advance-decline ratio,” he said.
Asian markets fell while European markets were nominally higher on Wednesday even as Global mining stocks suffered as metal prices slumped, driven by a robust US dollar and disappointment over China’s recent stimulus measures.
Traders were upset over the impact of Donald Trump’s presidency on the Chinese and global economies, with fears that his policies could also reignite inflation globally and/or result in stagflation, he added.
The Indian Rupee almost remained flat on Wednesday. On the spot market it closed at Rs 84.3850 against U.S. dollar as compared with 84.93900 in the previous day.
Wednesday also marked the end of the weekly Bank Nifty derivatives contracts, and traders preferred to unwinding position, which weighed on banking stocks.
Published – November 13, 2024 09:11 pm IST
