Stock Market slumps: Sensex dips 400+ points, Nifty falls below 22,800; auto, metal, PSBs lead the decline

Indian equity indices, BSE Sensex and Nifty50, were down on Monday amid uncertain market conditions. By 10 AM, Sensex fell 527 points to 75,411, while Nifty dropped 156 points to 22,773. Both indices had briefly hit their lowest points earlier in the day. Global developments, including the US administration’s handling of the Russia-Ukraine conflict and foreign investor outflows, will shape investor sentiment.

Indian markets have been declining for the past eight sessions. The broader market saw deeper losses, with Nifty Smallcap 100 and Nifty Midcap 100 indices falling over 2% at the open. However, some sectors managed to recover slightly. Nifty Realty, Auto, and Media indices led the declines, while Pharma and IT sectors posted gains.

Positive factors, such as easing geopolitical tensions, lower crude oil prices, and expectations of a rate cut from the Reserve Bank of India, could support market sentiment. Despite these factors, the market capitalization of BSE-listed companies has fallen to an eight-month low, dropping below Rs 400 lakh crore for the first time since June 2024.

As earnings season for Q4 2024 winds down, analysts note that results have been disappointing. Both the Nifty and BSE 500 saw single-digit growth in PAT. This led to more downgrades, though not as severe as those after Q3 2024. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributed the market’s struggles to high valuations and slower corporate earnings. He noted that the ongoing FII selling has further impacted the market, compounded by a stronger dollar. However, Vijayakumar expects a potential recovery if earnings improve and the dollar weakens, as India’s macros remain strong.

Looking forward, analysts suggest that the performance of the banking and IT sectors will play a crucial role in shaping market trends. Traders are advised to focus on managing trades carefully. Ajit Mishra, SVP of Research at Religare Broking, pointed out that while efforts to hold the 22,800 level continue, downside risks persist.

On Friday, Wall Street showed mixed results. While the S&P 500 stayed flat, the Nasdaq Composite gained 0.4%, and the Dow Jones fell 0.4%. Despite concerns about Trump’s tariffs, the US stock market managed to shrug them off and move closer to a record high.