Monday Mayhem: Sensex and Nifty Plummet Over 1,000 Points Amid Broad-Based Sell-Off
On January 13, 2025, the Indian stock market faced a significant downturn as benchmark indices Sensex and Nifty experienced a sharp decline, with the Sensex dropping over 1,000 points and the Nifty slipping below the 23,100 mark. This market turmoil, driven by a mix of global cues and domestic factors, led to extensive losses across sectors, with the India VIX, a measure of market volatility, jumping 7%.
Key Market Movements
By mid-afternoon, the Sensex had fallen by 1,065.11 points or 1.38% to 76,313.80, while the Nifty declined 349.65 points or 1.49% to 23,081.85. Broader markets bore the brunt of the sell-off, with mid-cap and small-cap indices witnessing losses of 4% and 4.5%, respectively. This extensive selling led to an erosion of over Rs 8 lakh crore in market capitalization during the session.
Global Factors at Play
The market’s downturn was influenced by global economic data, particularly the strong US jobs report released on Friday, which dampened hopes for imminent Federal Reserve rate cuts. The robust labor market data strengthened the US dollar, causing the dollar index to reach its highest level since 2022. This surge in the dollar exerted additional pressure on the Indian rupee, which opened at a record low of Rs 86.5 against the dollar.
Sectoral Impact
All sectoral indices closed in the red, with significant declines recorded across the board:
- Nifty Realty: Plunged 6%, making it the hardest-hit sector.
- Nifty PSU Bank: Fell over 3%, marking its fourth consecutive session of losses.
- Nifty Auto: Declined nearly 3%, led by major players like M&M, Maruti Suzuki, and Tata Motors.
- Nifty Metal: Saw substantial pressure, with top decliners including Tata Steel, JSW Steel, and Vedanta.
Expert Insights
Aishvarya Dadheech, CIO and Founder of Fident Asset Management, attributed the market’s decline to the robust US labor market data, which has shifted expectations around Federal Reserve rate cuts. He noted that non-institutional investors, who had been supportive of the market, have stepped back, exacerbating the sell-off. Dadheech emphasized that the market’s direction will largely depend on the ongoing earnings season. Disappointing results could prolong the negative sentiment, while the likelihood of rate cuts by the RBI appears diminished due to current economic conditions.
Stock-Specific Movements
Among individual stocks, notable movements included:
- IREDA: Shares jumped 5% following positive guidance from the management regarding a Rs 4,500 crore qualified institutional placement (QIP) planned for the January-March quarter.
- Zomato: Shares fell over 4.5%, continuing a nearly 20% decline over the past three weeks, as global brokerage firm Jefferies downgraded the stock to ‘hold’ due to concerns over rising competition in the quick commerce space.
- PB Fintech: Shares dropped 7% after Morgan Stanley downgraded the stock to ‘underweight,’ citing high valuations and lower-than-expected profit emergence.
Outlook and Conclusion
Akshay Chinchalkar, Head of Research at Axis Securities, highlighted that the Nifty’s performance in recent sessions indicates weakness, with critical support levels around 23,177 to 23,355. He cautioned that despite the Nifty nearing oversold territory, the 14-day momentum suggests potential for further weakness. Investors are advised to monitor upcoming earnings closely, as these will play a crucial role in determining the market’s trajectory.
Disclaimer: The views expressed are for informational purposes only and should not be considered as investment advice. Always consult with a certified financial advisor before making any investment decisions.
