India’s equity market is showing no signs of a recovery as the benchmark indices – NSE Nifty50 and BSE Sensex – fell sharply again on Monday, logging their sixth straight session of a decline. This is also the longest losing streak for the benchmarks since October 2023.
Even after opening the Monday session with decent gains, the BSE Sensex crashed up to 962 points or 1.17% to 80,726.06 intraday, while the Nifty50 fell 244 points or 0.97% at 24,770. At close, the Sensex settled 638 points or 0.78% lower at 81,050 while Nifty50 finished around 218 points or 0.87% lower to close at 24,795.
The selling pressure was much more intense in the broader market with the BSE SmallCap and MidCap index crashing up to 4% intraday. Investors lost a whopping Rs 9 crore on Monday as the market cap of all the firms listed on the BSE came down to Rs 452 lakh crore. It was at Rs 461 lakh crore at the end of Friday's trading session.
India’s equity market is falling despite Asian peers putting up a strong show and the mother US market holding its fort amidst rising tension in the Middle East between Israel and Iran.
Foreign institutional investors (FIIs) fleeing to China from India is believed to be the biggest reason for this correction which has pulled down the Nifty and the Sensex by more than 5% in just two weeks. FIIs sold shares worth Rs 8,283 crore on Monday after offloading more than Rs 40,000 crore last week.
Adding to this, exit polls predicting defeat for the ruling party – BJP - in two assembly elections have hampered investors’ sentiments.
“A combination of expensive valuations and foreign fund outflows have been driving investors to cut their exposure in Indian stocks, with banking, metals, telecom, oil & gas bearing the maximum brunt despite optimism across other Asian indices. Even the exit poll outcome of the two states are not in favour of the ruling government at the Centre, which has further dampened the investors' sentiment,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
Vaishali Parekh, Vice President - Technical Research, PL Capital Group - Prabhudas Lilladher - said that the Nifty has lost almost 1500 points from the peak zone of 26277 level and has slipped below the important 50EMA zone of 25000 levels to weaken the bias expecting for further slide.
“With the geopolitical tensions hovering around, the index is precariously placed with next important support level visible near the 100 period MA at 24300 level and further, has the major support positioned near the crucial 200 period MA at 23200 levels,” added Parekh.
The biggest losers in the Nifty50 pack on Monday were NTPC, Adani Ports, Adani Enterprises, SBI and Coal India. Except the IT index, all other sectoral indices ended in the red.
Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers, said that the markets have been experiencing significant profit booking recently, alongside a large sell-off by Foreign Institutional Investors (FIIs). This trend, which has been ongoing for the past week, has unsettled investor sentiment, creating a more cautious and risk-averse atmosphere. Investors, having seen gains in the recent past, are now looking to lock in profits, further contributing to the downward pressure on market indices.
He added that the profit booking, FIIs' sell-offs, and geopolitical risks have created a complex environment, clouding the outlook for market performance and contributing to a more cautious approach among investors.