Markets See Steep Decline Amid Broad-Based Selloff
India’s key equity indices, the BSE Sensex and NSE Nifty, witnessed sharp declines on Monday, January 6, 2025, as investor sentiment turned bearish. The Indian equity markets saw the Sensex plummet by 1,258.12 points (1.59%) to close at 77,964.99, marking a significant fall below the 78,000 threshold. Earlier in the day, the index dropped further to an intraday low of 77,781.62. Similarly, the Nifty plunged by 388.70 points (1.62%) to settle at 23,616.05, reflecting a broad-based selloff across sectors.
The market rout was fueled by concerns over the third-quarter earnings season and sustained foreign institutional investor (FII) outflows. Exchange data revealed that FIIs had offloaded equities worth ₹4,227.25 crore on Friday, underscoring their continued exit from Indian markets. Additionally, global cues remained mixed, with weak trends in most Asian markets and modest gains in U.S. indices failing to offset domestic concerns.
Factors Behind the Selloff
Market participants pointed to several compounding factors driving the selloff. Among these were apprehensions regarding the Human Metapneumovirus (HMPV) scare, which has heightened health-related anxieties globally. A depreciating rupee further added to investor concerns, while Brent crude prices dipped slightly to $76.32 per barrel, reflecting global economic uncertainty.
“The Indian equity markets are under severe pressure, with both Nifty and Bank Nifty breaching their 200-day moving averages. A combination of FII selling, earnings season concerns, and the HMPV scare has triggered fresh rounds of selling,” stated Santosh Meena, Head of Research at Swastika Investmart.
Notably, blue-chip stocks bore the brunt of the decline. Heavyweights such as Tata Steel, NTPC, Reliance Industries, Kotak Mahindra Bank, and Mahindra & Mahindra recorded substantial losses. Only Titan and Sun Pharma managed to stay in the green, offering minor relief to an otherwise bleak trading session.
Global and Sectoral Impact
Globally, market trends were mixed, with Seoul closing higher while Tokyo, Shanghai, and Hong Kong ended in the red. European markets displayed a mixed performance during trading hours, offering little guidance to Indian investors.
Sectorally, the selloff was widespread, impacting banking, metals, and energy stocks the most. Among individual stocks, Adani Ports, Asian Paints, and Power Grid also witnessed steep declines. On the currency front, a weakening rupee against the dollar further exacerbated the downtrend, adding pressure on imported goods and raising concerns about inflation.
Monday’s slump follows a weak performance on Friday when the Sensex had dropped by 720.60 points, and the Nifty fell by 183.90 points. Analysts caution that volatility may persist in the short term, with market dynamics hinging on upcoming corporate earnings results and global developments surrounding the HMP virus.
As uncertainty looms in the Indian equity markets, investors are advised to tread cautiously, monitor key global and domestic indicators, and focus on defensive sectors to weather the current market turbulence.
