Sensex, Nifty sink: 5 Reasons behind the crash—Is more trouble ahead?
Sensex and Nifty dropped on Friday, mirroring a US stock selloff triggered by rising jobless claims and weak Walmart earnings. Foreign outflows from India and renewed interest in Chinese equities added to the pressure. Concerns over potential Trump tariffs, weak corporate earnings, and high stock valuations further fueled the decline.
The BSE Sensex fell 383.86 points to 75,352.10, while Nifty lost 118 points to 22,795.25. M&M plunged 5.8% to Rs 2,675, with UltraTech Cement, Tata Motors, Power Grid, and ICICI Bank also slipping up to 2.5%. Adani Ports, Zomato, Sun Pharma, and Maruti Suzuki India were among the key losers.
ICICI Securities noted extreme pessimism in market breadth indicators, with only 13% of Nifty 500 stocks above their 50-SMA and 200-SMA. Historically, such conditions signaled a market bottom, making it a good time to accumulate quality stocks with strong earnings.
V K Vijayakumar of Geojit Financial Services said investors are shifting focus to domestic consumption stocks, less affected by tariff threats. He expects Trump’s tariff strategy to involve threats followed by negotiations, delaying its impact. He also warned that higher tariffs could stoke US inflation, triggering hawkish Fed comments and hitting US markets. Continued FII selling, driven by interest in recovering Chinese stocks, will pressure Indian large-caps.
Disappointing corporate earnings worsened market sentiment. Elara Securities reported a decline in its beat-to-miss ratio, falling to 0.6 in Q3 from 0.7 in Q2. Small-caps fared worst, with 63% missing expectations, while 32% of large-caps and 41% of mid-caps also underperformed. Banking and IT sectors saw stronger earnings, while auto, energy, and consumer discretionary struggled.
Nomura India noted that the stock selloff mirrored trends in Indonesia and Thailand. After a strong market run, economic and earnings growth fell short of expectations, pushing Nifty’s valuation multiple down to 19 times one-year forward earnings from 21.3 times in September 2024.
