Sensex, Nifty slump; Rs 5.2 lakh crore investor wealth wiped out: Why markets fell today

Indian equity benchmarks resumed their sharp fall on Wednesday after a single-day halt, weighed down by weakness in heavyweight stocks and lingering global concerns. The 30-share BSE Sensex pack tumbled 1,342.27 points or 1.72 per cent to close at 76,863.71, while the NSE Nifty index dropped 394.75 points or 1.63 per cent to 23,866.85.

The steep selloff erased around Rs 5.2 lakh crore from the BSE's total market capitalisation (m-cap) during the opening trade. Investor wealth, as reflected by the BSE m-cap, declined by Rs 5.26 lakh crore to Rs 441.78 lakh crore, compared with Rs 447.04 lakh crore in the previous session.

Heavyweight stocks such as HDFC Bank Ltd, Axis Bank Ltd, ICICI Bank Ltd, Bharti Airtel Ltd, Bajaj Finance Ltd, Reliance Industries Ltd (RIL), Mahindra & Mahindra (M&M), State Bank of India (SBI), Infosys Ltd, Kotak Mahindra Bank, Tata Consultancy Services (TCS), Maruti Suzuki India Ltd (MSIL) and Larsen & Toubro (L&T) were among the key contributors to the decline, dragging the benchmarks lower.

The broader market also mirrored losses, with Nifty Midcap 100 falling 1.25 per cent and Nifty Smallcap 100 down 0.36 per cent.

Sharing the market outlook, Gaurav Sharma of Globe Capital said, "The US-Iran conflict is still on, and the Strait of Hormuz is not normalised for maritime transit yet. Till these things return to normal, it will be difficult to say whether the worst is behind us or not."

He added, "We need to maintain a very agile trading strategy and look at investment opportunities which have been beaten down due to the ongoing war." Sharma further said, "We've been bullish on the PSU banking pack. Canara Bank, Indian Bank and SBI are the top picks from the select segment."

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "There are some important market trends that investors should analyse and try to understand now. One, the FII vs DII game is back to the last one-year pattern of sustained selling by FIIs being more than matched by sustained buying by DIIs. Given the continuing indifference of FIIs towards India and the sustaining inflows into Indian equity mutual funds, this game is likely to continue in the near-term. Two, despite the weakness in the market some segments like pharmaceuticals and domestic consumption themes like telecom, automobiles and defence are exhibiting resilience."

He added, "Sustained FII selling has made large banking stocks, which constitute the largest segment of FII's AUM, attractive. These stocks have the potential to reward investors who can buy and hold them for at least two years. Here patience is the key. The decline in Brent crude to below $88 will improve the risk-on sentiment in the market."

Ponmudi R, CEO of Enrich Money, said, "The near-term outlook for Indian equities remains sensitive to global cues, particularly crude oil price movements, geopolitical developments, and trends in foreign institutional investor flows. Until clearer global triggers emerge, markets are likely to remain range-bound with intermittent bouts of volatility."