Black-Monday: Sensex Crashes 1,000 Points, Nifty Sinks Below 23,100, Mid & Smallcaps Tank 4%
Sensex crash: On January 13, benchmark indices Nifty and Sensex experienced a significant decline as broad-based selling intensified on the bourses. Data indicates that over Rs 12.39 lakh crore of market capitalization was wiped out during the trading session. The mid and small-cap indices were hit the hardest, underperforming the frontline indices.
Mid- and small-caps saw a sharp decline of 4 percent and 4.1 percent, respectively. Aishvarya Dadheech, CIO and Founder of Fident Asset Management, suggested that the pain in the mid and small-cap segments may persist, while the Nifty and large caps could be entering oversold territory. The market’s direction will depend on the ongoing earnings season, with disappointing results potentially prolonging the negative sentiment.
Global factors also influenced market sentiment, with Asia-Pacific stocks opening lower following a disappointing US jobs report on Friday. Wall Street’s main indexes closed the week in the red, adding to the pressure. Additionally, the dollar index reached its highest level since 2022, putting strain on the Indian rupee, which opened at an all-time low of Rs 86.18 against the dollar.
By the end of the trading day, the Sensex was down 1,025.04 points or 1.32 percent at 76,353.87, while the Nifty was down 344.35 points or 1.47 percent at 23,087.15. Out of the shares traded, 442 advanced, 3,219 declined, and 101 remained unchanged.
The market’s decline was attributed to strong US labor market data strengthening the dollar and diminishing expectations of Federal Reserve rate cuts. This led to a significant outflow of funds from emerging markets, including India, adding pressure to the broader market. Dadheech noted that non-institutional investors, who had been supporting the market, have withdrawn, contributing to the sell-off.
He believes that the direction of the market will depend heavily on the ongoing earnings season. If the results are disappointing, it could prolong the negative sentiment. Regarding rate cuts, he mentioned that the likelihood of cuts has significantly decreased. The RBI is unlikely to implement rate cuts soon due to current economic conditions. Any potential cuts in the US will depend on upcoming data over the next few months.
In addition, all sectoral indices closed in the red, with each recording losses of over a percent. The Nifty Realty index experienced the biggest drop, plummeting by a significant 6.5 percent. The Nifty PSU Bank index also declined over 3 percent, extending its losing streak to a fourth session due to weak Q3 updates from select banks. Metal stocks faced significant pressure, with Tata Steel, JSW Steel, and Vedanta leading the declines. The Nifty Auto also slid nearly 3 percent, with M&M, Maruti Suzuki, and Tata Motors taking the biggest hits. The FMCG and Bank indices each slipped by 1.2 percent.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.