India’s equity market fell sharply on Monday over fears related to the new HMPV virus, continuous selling by foreign institutional investors (FIIs) and weakening global cues.
The Sensex ended 1,258.12 points or 1.59% lower at 77,964.99 while the Nifty fell 388.70 (1.62%) to settle at 23,616.05. During intraday deals, the two indices plummeted by up to 1.88%. The sharp sell of wiped out more than Rs 12 lakh crore from investors kitty as the market market capitalisation of all BSE listed firms fell most in a single-day fall in three months. At the end of Monday’s session, the m-cap came down to Rs 438.95 lakh crore.
“The market today experienced a decline and entered a state of panic, primarily due to the detection of a case of human metapneumovirus (HMPV) in Bangalore. This virus, a type of respiratory illness, has the potential to disrupt businesses, logistics, and even lead to partial lockdowns, similar to the impact of COVID-19,” said Anand K. Rathi, Co-Founder of MIRA Money.
Narendra Solanki, Head Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers said that the HDFC Bank and other major players reported headline numbers that fell below market expectations, intensifying worries about the upcoming third-quarter earnings season. “These disappointing figures come amidst an already weak global macroeconomic environment, marked by heightened uncertainties and challenges. Adding to the pressure, the emergence of a new HMPV virus variant has further unsettled investors, sparking fears of potential disruptions,” said Solanki.
Experts said that all these factors cast a shadow over near-term market sentiment. The market was further pressured by continued FII outflows, with net sales of Rs 4,285 crore on Friday. The exit coincides with weakening of Indian rupee. The global cues have also turned negative as officials at the Federal Reserve have taken a hawkish stance on future rate cuts.
From the 30-share Sensex pack, Tata Steel, NTPC, Kotak Mahindra Bank, IndusInd Bank, Power Grid, Zomato, Adani Ports, Asian Paints, Mahindra & Mahindra and Reliance Industries were among the biggest laggards. Fifteen Sensex stocks fell more than 2% on Monday.
In the broader market, the Nifty Smallcap100 and Nifty Midcap100 indices ended down by 2.70%, and 3.20%, respectively. All sectoral indices also ended in the red, with Nifty PSU Bank falling by 4%.
What Market Experts said:
Santosh Meena, Head of Research, Swastika Investmart:
The Indian equity markets are witnessing a sharp decline today, with both Nifty and Bank Nifty slipping below their 200-day moving averages (DMA). The sell-off can be attributed to a rise in foreign institutional investor (FII) selling and concerns surrounding the upcoming Q3 earnings season. Additionally, fears related to the new HMPV virus have added to the bearish sentiment, triggering fresh rounds of selling after the recent counter-trend pullback rally. The overall market structure appears weak; however, there remains a glimmer of hope for the bulls. One key factor is the lack of consistent follow-through in either direction, suggesting a degree of indecision. Furthermore, both Nifty and Bank Nifty are currently trading near their crucial support levels of 23,500 and 49,700, respectively, which could provide some respite to the bulls.
Vinod Nair, Head of Research, Geojit Financial Services:
Emerging markets are undergoing consolidation due to uncertainties surrounding new US economic policies, the Fed's hawkish stance on future rate cuts, potential upward revision for CY25 inflation, and a strong dollar, all of which are negatively impacting market sentiment. The primary catalyst for a sharp sell-off in the domestic market appears to be concerns over the human metapneumovirus (HMPV). Additionally, the initial Q3 consensus earnings estimate suggests a potential gradual recovery in domestic corporate earnings, which could explain the domestic market's underperformance compared to global markets led by premium valuation.