Market sell-off continues! Investor wealth worth over Rs 25 lakh crore wiped out in 6 sessions

Indian equity benchmarks on Monday continued their steep fall for the sixth consecutive session as foreign fund outflow and escalation in Middle East tensions weighed on investor sentiment. The 30-share BSE Sensex pack slumped 638 points or 0.78 per cent to close at 81,050 and the broader NSE Nifty index moved 219 points or 0.87 per cent down to end at 24,796. At today's closing levels, Sensex has cracked 4,786 points and Nifty has lost 1,420 points in six trading days.

Investor wealth, as suggested by the BSE market capitalisation (m-cap), fell Rs 8.90 lakh crore to Rs 451.99 lakh crore compared with a valuation of Rs 460.89 lakh crore recorded in the previous session. And, around Rs 25.16 lakh crore of BSE market cap has been wiped out from September 26's closing value of Rs 477.16 lakh crore.

For Sensex, the major culprits that dragged the index lower today were HDFC Bank, Reliance Industries Ltd (RIL), State Bank of India (SBI), Axis Bank, NTPC, PowerGrid, Adani Ports, ICICI Bank Titan and Kotak Mahindra Bank. On NSE, 15 out of the 16 sub-indices were down. Nifty PSU Bank, Nifty Metal, Nifty Oil & Gas and Nifty Media fell sharply. However, Nifty IT closed in the green.

"A combination of expensive valuations and foreign fund outflows have been driving investors to cut their exposure in Indian stocks, with banking, metals, telecom, oil and gas bearing the maximum brunt despite optimism across other Asian indices," said Prashanth Tapse, Senior VP (Research), Mehta Equities.

"Even the exit poll outcome of the two states (Haryana and Jammu & Kashmir) are not in favour of the ruling government, which has further dampened the investor sentiment," Tapse added.

The markets have been experiencing significant profit booking recently, alongside a large sell-off by foreign institutional investors (FIIs), said Narendra Solanki, Head of Fundamental Research - Investment Services at Anand Rathi. "This trend, which has been ongoing for the past week, has unsettled investor sentiment, creating a more cautious and risk-averse atmosphere. Investors, having seen gains in the recent past, are now looking to lock in profits, further contributing to the downward pressure on market indices," Solanki added.

He also mentioned that geopolitical concerns are also playing a role in shaping short-term market direction. "The escalating tensions between Iran and Israel have introduced a level of uncertainty and risk that investors find difficult to ignore. Any potential military conflict in the region could disrupt global oil supplies and increase volatility in energy markets, which in turn impacts broader financial markets. This uncertainty adds to the already fragile investor sentiment, making it harder for the markets to find a clear direction in the near term," he said.

Solanki suggested that market participants should remain 'cautious'. "Together, the profit booking, FIIs' sell-offs, and geopolitical risks have created a complex environment, clouding the outlook for market performance and contributing to a more cautious approach among investors," he stated.

Nifty outlook

"In the short term, Nifty may remain volatile, with a predominantly bearish outlook. Overall, the market appears to be 'sell-on-rise' as long as it stays below 25,000. On the downside, support levels are positioned at 25,700, 25,590, and 25,400," said Rupak De, Senior Technical Analyst at LKP Securities.