Sensex, Nifty plunge over 5% this week; investors lose Rs 19 lakh crore — will markets fall further next week?

Domestic equity benchmarks BSE Sensex and NSE Nifty extended their downtrend for the third consecutive day on Friday, weighed down by weak global cues, escalating tensions in West Asia, continued foreign outflows, and a rise in crude oil prices.

At close, the Sensex tanked 1470.50 points, or 1.93 per cent, to settle at 74,563.92, taking its weekly drop to 5.51%, or 4,354.98 points. While the Nifty plunged 488.05 points, or 2.06 per cent, to end at 23,151.10, it slipped 5.31% or 1,299.35 points this week. 

Investors’ wealth eroded by over Rs 19 lakh crore this week, as the combined market capitalisation of BSE-listed companies dropped to Rs 430 lakh crore, compared with Rs 449.35 lakh crore at close on March 6.

The sharp correction has been largely driven by the rise in crude oil prices and growing macroeconomic concerns in energy-importing economies such as India, said Hariprasad K, SEBI-registered research analyst and founder at Livelong Wealth.  

“Higher crude prices not only elevate inflation risks but also contribute to currency weakness, with the Indian rupee coming under pressure, further dampening investor sentiment,” Hariprasad noted.

Top gainers & losers

Among Sensex constituents, Larsen & Toubro (L&T) emerged as the top loser, falling 7.52% to Rs 3,440.95. Tata Steel followed with a 5.20% decline, while State Bank of India (SBI), Bharat Electronics (BEL), Maruti Suzuki and UltraTech Cement dropped 3.55%, 3.12%, 3.12% and 3.07%, respectively. 

While Hindustan Unilever (HUL) and Bharti Airtel are the only gainers on the Sensex, gaining up to 1.18% today.

Five stocks, namely L&T, HDFC Bank, SBI, Axis Bank and ICICI Bank contributed largely to the Sensex’s fall.  

The India VIX has surged over 13% this week, reflecting a sharp rise in market volatility and heightened uncertainty among investors, said Ponmudi R, CEO of Enrich Money.

Among sectoral indices, the BSE Metal index slumped 3.27% to settle at 53,876.79, while the BSE Auto index dropped 4.83% to settle at 37,268.72.

According to Hariprasad, metal stocks fell during the session as global metal prices fell due to slowing industrial demand. 

“Concerns about gas supply shortages and energy disruptions have prompted several manufacturing companies to delay procurement of fresh raw materials until there is greater clarity on geopolitical developments, particularly a potential ceasefire in the US–Iran conflict,” Hariprasad said.

In the 30-pack index, shares of Bajaj Finserv, HDFC Bank, Kotak Mahindra Bank, Infosys, Tata Consultancy Services (TCS) and Trent hit their 52-week lows today.

Market breadth remained negative on BSE. Of the 4,421 actively traded stocks, 941 ended in the green, while a dominant 3,348 declined and 132 settled unchanged. 

Today's session saw 55 stocks touch 52-week highs, while 563 counters fell to their 52-week lows.

“The lack of buying support from domestic institutional and retail investors, coupled with continued FII outflows, intensified the decline,” said Vinod Nair, Head of Research at Geojit Investments Limited.

Stock market outlook

Hariprasad said, “From a technical standpoint, Nifty experienced extreme selling pressure during the session and closed close to the crucial psychological support level of 23,000 after marking an intraday low near 23,100. The index is now approaching an important gap zone between 23,200 and 22,950, which was created in April last year and may act as a potential support area.”

Hariprasad also said that 23,000 remains a critical support level. A decisive breakdown below this zone could open the door for a deeper correction.” On the upside, Hariprasad said “23,300 stands as the immediate resistance, followed by 23,500, where selling pressure may re-emerge.” 

“Nifty 50 ended the session under strong bearish pressure after breaking below the 23,300 support level. The index is currently hovering around the 23,100–23,200 zone, indicating continued weakness with sellers maintaining control over the short-term trend,” said Ponmudi

According to Ponmudi, “23,100 now acts as an immediate support level and has emerged as a minor intraday demand zone. A decisive break below this level could accelerate the decline toward 22,800, while further weakness may extend the fall toward the 22,400 region.” On the upside, he said “23,450–23,500 has now turned into the immediate resistance zone… A sustained move above this zone could trigger a short-covering bounce toward 23,800.” 

However, Ponmudi cautioned that “Nifty is likely to remain volatile with a downside bias, unless the index manages to reclaim the 23,800 resistance zone.”

“Given the prevailing uncertainty and heightened volatility, participants are advised to maintain a cautious stance, keep position sizes light and focus on strict risk management while adopting a selective trading approach," said Ajit Mishra – SVP, Research, Religare Broking Ltd.