The Sensex and Nifty witnessed significant selling pressure on Wednesday as rising inflation concerns and sustained foreign investor outflows dampened sentiment, with the benchmark indices posting sharp losses.

The BSE Sensex plunged 984.23 points or 1.25 per cent to close at 77,690.95, while the broader NSE Nifty50 fell 324.40 points or 1.36 per cent to end at 23,559.05. The market breadth was heavily skewed towards decliners, with 3,299 stocks falling against 670 advances on the BSE.

“Relentless selling by FIIs amid weak corporate earnings and a sharp surge in domestic inflation to a 14-month high have further impacted investor sentiment, dashing hopes for a near-term rate cut by the RBI,” said Vinod Nair, Head of Research at Geojit Financial Services.

The sell-off was broad-based, with mid and small-cap stocks bearing the brunt of the selling pressure. The Nifty Midcap Select index dropped 261.90 points or 2.12 per cent to 12,071.10, while the Nifty Next 50 fell 1,347.45 points or 1.97 per cent to 67,101.45.

Banking and financial stocks were among the major drags, with the Nifty Bank index declining 1,069.45 points or 2.09 per cent to 50,088.35, while the Nifty Financial Services index shed 425.25 points or 1.80 per cent to close at 23,138.40.

“With inflation once again rising sharply and breaching the RBI’s comfort level, receding hopes of a major rate cut in the near future by the central bank put the markets into a tizzy,” explained Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Among individual stocks, Hero MotoCorp led the losses, falling 4.21 per cent, followed by Mahindra & Mahindra (-3.47 per cent), Hindalco (-3.40 per cent), Tata Steel (-3.11 per cent), and Eicher Motors (-2.94 per cent). On the flip side, Britannia Industries (0.40 per cent), Grasim Industries (0.35 per cent), Tata Motors (0.25 per cent), Asian Paints (0.13 per cent), and NTPC (0.04 per cent) were the only gainers among Nifty constituents.

The market volatility increased significantly, with the India VIX jumping 5.03 per cent to 15.33. Technical analysts noted that the Nifty tested crucial support levels during the day.

“Nifty has now corrected more than 10 per cent from its record high, reaching its major moving average support,” said Ajit Mishra, SVP Research at Religare Broking Ltd. He added that the banking index, midcap, and smallcap indices also retested their long-term support levels at the 200-day exponential moving average.

Market participants also pointed to global factors affecting sentiment. “This trend is mirrored across all emerging markets, as markets are jittery about future US policy actions, including trade-related implications for the world economy, which is reflected in the strengthening US dollar and rising yields,” Nair added.

The session saw 147 stocks hitting 52-week highs, while 175 touched their 52-week lows. Five stocks hit the upper circuit limit, while one stock hit the lower circuit.

Looking ahead, analysts suggest the market could see limited recovery in select stocks. “The current market texture is weak but oversold, hence, we could expect one quick intraday pullback rally from the current levels,” said Shrikant Chouhan, Head Equity Research at Kotak Securities, identifying 23,500 as a crucial support level for the Nifty.

Published on November 13, 2024