In a significant downturn, Sensex dropped over 1,092 points to close at 74,775.74, while Nifty 50 fell nearly 359 points to end the session at 23,547.75. This decline coincides with a 9% rise in India VIX, indicating increased market volatility.
The sharp losses resulted in a reduction of nearly Rs 5 lakh crore in the total market capitalisation of all companies listed on BSE, bringing it down to Rs 466 lakh crore.
Power Grid shares led the decline on Sensex, crashing more than 4%, followed by IndiGo shares, which fell over 3% ahead of its Q4 results. Other significant losers included Bajaj Finance, UltraTech Cement, Tata Steel, Sun Pharma, and NTPC, each declining over 2%. In contrast, Tech Mahindra and HCLTech shares rose nearly 2%, bucking the overall bearish trend.
“The prospect of deficient rainfall, coupled with the increasing likelihood of an El Niño weather pattern, has heightened fears of elevated food inflation in the coming months.”
Vinod Nair, Head of Research at Geojit Investments
The negative sentiment extended to broader markets, with Nifty Smallcap 100 and Nifty Midcap 100 indices both falling around 1%. Sectorally, Nifty Oil & Gas dropped around 2.5%, while Nifty Metal tumbled over 2%. However, Nifty IT managed to close marginally higher.
The market downturn can be attributed to several factors. The India Meteorological Department's forecast of below-normal rainfall, the lowest in 11 years, has raised concerns about potential inflationary pressures. Additionally, uncertainties surrounding the Iran-US peace deal and persistent foreign institutional investor (FII) selling have contributed to the market's decline.
Background
The Indian stock market has been experiencing volatility due to various global and domestic factors. The IMD's monsoon forecast is particularly significant as it impacts agricultural output and inflation, which are critical to the Indian economy.
Looking ahead, investors will be closely monitoring developments in the Iran-US peace deal and the impact of monsoon forecasts on inflation. The market's response to these factors will be crucial in determining future trends.
