On October 22, the Indian stock markets experienced a significant downturn, with benchmarks hitting their lowest levels since mid-August. The Nifty 50 fell below the critical 24,500 mark, closing at 24,472, while the Sensex dropped by 931 points to finish at 80,221. Over the last two trading sessions, investors faced massive capital erosion, losing ₹13 lakh crore, as market sentiment remained overwhelmingly negative. This marked the worst rout for the Indian market in months, characterized by widespread selling across both large-cap and mid-cap stocks. By the end of the session, only two out of 50 Nifty 50 stocks managed to stay positive, with individual stocks suffering losses of up to 4%. The Nifty’s drop of 309 points indicated increasing investor unease amid volatile global conditions, including geopolitical tensions and worries surrounding the US presidential election.
The midcap segment was particularly hard hit, with the BSE Midcap Index sliding by 1,504 points, or nearly 3%, to close at 56,174. Over the past two sessions, the midcap index has plummeted by 5%, leading to significant wealth erosion. This broad-based selling has contributed to a negative market breadth, with small-cap stocks also suffering considerable losses. The total market capitalization of firms listed on the BSE fell to ₹444.7 lakh crore from ₹453.7 lakh crore in the previous session. Public sector banks (PSU banks) were among the worst performers, with the PSU Bank Index sinking by 4%. Rate-sensitive stocks, particularly in the real estate sector, faced intense selling pressure, causing the Nifty Realty Index to decline by over 3%. Despite some companies reporting strong Q2 results, investor sentiment remained jittery.
Key stocks across various sectors felt the heat, with Adani Group stocks extending their recent losses—Adani Power and Adani Enterprises fell by 3% to 4%. Supreme Industries saw a significant drop of nearly 10% following a disappointing Q2 earnings report. Even Hyundai Motor India’s debut on the stock market failed to cheer investors, as it slid 7% on its first trading day.
Technology and financial stocks were not spared either, with companies like Coforge, Bajaj Finance, and Persistent Systems slipping by up to 2% ahead of their Q2 results. However, some respite was found in ICICI Bank and Nestle, which managed to remain in the green despite the broader market downturn.
Several factors have contributed to the sharp decline in Indian markets over the past two sessions. Escalating geopolitical tensions, particularly in the Middle East, have heightened uncertainty. Reports of increased conflict, including Hezbollah rocket attacks near Tel Aviv, have driven global markets into a risk-off mode. This geopolitical unrest is expected to persist, further affecting investor sentiment.
Additionally, the upcoming US presidential election, now less than a month away, has created significant uncertainty in the markets. The tight race between Democratic Vice President Kamala Harris and Republican Donald Trump leaves investors cautious, as any unexpected outcome could ripple across global markets. Furthermore, unimpressive earnings from several companies and the stretched valuations of Indian stocks have amplified the bearish mood. Foreign portfolio investors (FPIs) have also been withdrawing funds due to concerns over global economic slowdowns and potential rate hikes by central banks.
With the Nifty and Sensex facing steep declines and midcaps experiencing a deeper sell-off, the outlook for Indian equities appears challenging. Analysts warn that while long-term fundamentals may remain intact, short-term volatility is likely to persist as geopolitical concerns and global economic uncertainty continue to influence investor behavior.
Disclaimer: The information provided in this report is for informational purposes only and should not be considered as financial advice. Investing in financial markets involves risk, including the potential loss of principal. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making investment decisions. The authors and publishers of this report do not accept any responsibility for any losses incurred from the use of this information.
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