Bear attack on Dalal Street: Why Sensex fell 713 pts, Nifty below 23,500?

The key benchmark indices – Sensex, Nifty faced a bear attack on Wednesday, with the BSE Sensex falling 713 points or 0.91 per cent to its intraday low of 77,486, while the NSE’s Nifty50 slipping 211 points or 0.89 per cent at 23,496 in intraday trade. 

 

Top gainers and losers

 

24 out of 30 bluechip stocks were in the red zone on the BSE Sensex with Zomato being the top loser falling 3 per cent, followed by Adani Ports (down 2.5 per cent), Titan (down 2.5 per cent), SBI (down 2.3 per cent), and ICICI Bank (down 2.1 per cent).

 

 

That apart, Reliance Industries led the gains, rising 2.5 per cent and followed by the likes ITC, Maruti Suzuki, TCS, Asian Paints and HUL. 

 

Meanwhile, the index heavyweights that pulled the BSE Sensex down on Wednesday in terms of contribution included HDFC Bank contributing 182 points. Other index giants included ICICI Bank (128 points), Infosys (100 points), ICICI Bank (81 points) and Axis Bank (77 points). 

 

On the NSE, the losers included Apollo Hospitals (down 3.5 per cent), Shriram Finance (down 3.4 per cent), Trent (down 3.3 per cent) and Adani Ports (down 2.4 per cent).

 

On the other hand, the top gainers on the index included ONGC (up 2.4 per cent), Reliance Industries (up 2.2 per cent), and Dr Reddy’s Labs (up 1.6 per cent) among others. 

 

Sectoral trends

 

Among sectoral trends, the Nifty Consumer Durables index led the losses, plunging 3.33 per cent intraday, as heavyweights in the sector faced sharp sell-offs.

 

The Nifty Realty index also faced substantial pressure, dropping 1.82 per cent, followed closely by Nifty PSU Bank, which slipped 1.58 per cent. Financial indices were among the worst performers, with Nifty Financial Services falling 1.51 per cent.

 

Healthcare and private banking stocks also struggled, as the Nifty Healthcare Index and Nifty Private Bank both declined by over 1.2 per cent. Meanwhile, the Nifty IT index fell 0.78 per cent, reflecting weakness in technology stocks, while Nifty Media dropped 0.99 per cent.

 

Broader markets were also under pressure with the BSE SmallCap index cracking 1.62 per cent, and the BSE MidCap index tanking 1.83 per cent on Tuesday.

 

What’s behind the market fall?

 

The fall in the Indian stock market came amid continuous selling by foreign institutional investors (FIIs), slowing economic growth and global market weakness. 

 

On Tuesday, FIIs sold shares worth Rs 1,491.46 crore on December 16, while DIIs bought equities worth Rs 1,615.28 crore. 

 

Further, The Indian economy's growth is projected to slow to a four-year low of 6.4 per cent in FY25, falling short of the Reserve Bank of India’s (RBI) forecast of 6.6 per cent, according to the First Advance Estimates released by the National Statistics Office (NSO) on Tuesday.

 

Moreover, the country's largest public sector bank, SBI, downgraded India's GDP growth forecast to 6.3 per cent for FY25 after an NSO estimate of 6.4 per cent. 

 

According to analysts at Japanese brokerage firm Nomura, India is in the midst of a cyclical growth slowdown, led by headwinds from fading urban pent-up demand, tight monetary policy, household balance sheet stress, slowing nominal income growth and a negative credit impulse.

 

“Considering the advance estimates are based on partial data, and with the economy in a slowdown phase, we expect a downward revision in FY25 GDP growth from 6.4 per cent to closer to our forecast of 6 per cent y-o-y. Growth has been a mixed bag during the festive season of October-November, especially for consumption, industrial & investment growth has been mostly tepid, and early data for December do not suggest a strong rebound thus far,” Sonal Varma and Aurodeep Nandi of Nomura said in a report.

 

Furthermore, analysts believe that the trend of strong US macros weakening emerging markets is continuing. The US 10-year bond yield has spiked to 4.67 per cent on better-than-expected jobs numbers and indications of the services sector doing very well. This means the Fed may hold rates in January leading to further strengthening of the dollar and rising bond yields, they said. 

 

“The fall out of this on the Indian macros is that the RBI may hold rates in February against the market expectation of a cut. In this macro setting, FIIs are likely to continue selling, putting pressure on the market. Large caps, despite fair valuations, may continue to be on the defensive,” Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services

 

Global markets 

 

The decline in the Indian stocks came amid a similar show overnight on Wall Street, where US stocks fell and US Treasury yields climbed as data highlighted the resilience of the American economy, suggesting fewer interest rate cuts by the Federal Reserve this year. 

 

Benchmark 10-year Treasury yields rose 7.5 basis points to 4.691 per cent. Accelerated US services sector activity in December, coupled with a near two-year high in input prices, pointed to persistent inflation aligned with the Fed's outlook.

 

The Nasdaq Composite led the declines on Wall Street, falling by nearly 2 per cent. The broad-market S&P 500 also dropped by more than 1 per cent, while the blue-chip Dow Jones Industrial Average fell by 0.4 per cent.

 

Meanwhile, Asia-Pacific markets were trading mixed on Wednesday, with Japan’s Nikkei falling 0.26 per cent, while China’s CSI 300 lost 0.18 per cent

 

Hong Kong’s Hang Seng Index dropped 0.94 per cent. In contrast, South Korea’s Kospi climbed 1.16 per cent, and the Kosdaq advanced 0.19 per cent. Australia’s S&P/ASX 200 increased 0.77 per cent.

 

Tech levels to watch

 

According to technical pundits, the recent low of 23263 is not far for the Nifty as the near term trend for the index remains bearish, but there is a fair possibility of the ongoing downswings to ease off without penetrating 23,400. 

 

“We believe an outright fall below 23,263 may take a while to evolve. Major supports below are seen at 23,000 and 22,260,” said Anand James, chief market strategist, Geojit Financial Services.