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The Indian stock market on Monday recorded its biggest decline in three months. Sensex and Nifty witnessed a huge decline due to continuous selling by foreign portfolio investors (FPIs) and quarterly reports of weak loan-deposit figures of Indian banks. In such a situation, concerns have now increased about the December quarter results of companies.
The Sensex closed down 1258 points or 1.6 per cent at 77,965 while the Nifty closed down 389 points or 1.6 per cent at 23, 616. Monday's decline for both the indices is the biggest fall since October 3, 2024. India VIX, which is known to be a measure of market volatility, rose 15.6 per cent to 15.6, which is the highest level since November 22, 2024. The total market capitalization of firms listed on the BSE fell by Rs 11 lakh crore to Rs 438 lakh crore.
Disappointing business updates for the December quarter weighed on business sentiments and led to a sell-off in banking stocks. HDFC Bank was the second biggest loser in the Sensex, falling 2.2 per cent. Shares of Kotak Mahindra Bank, State Bank of India and Axis Bank also fell.
"Over the weekend, banks reported their loan and deposit growth numbers which were not good. HMPV fears amid weak market sentiment led to a negative sentiment," said Andrew Holland, chief executive officer of Avendus Capital Public Markets Alternative Strategies.
On Monday, FPIs sold shares worth Rs 2,575 crore. So far this month, FPIs have made net sales of Rs 7,160 crore. The country's stock market has seen selling since the last weeks of September amid weak corporate earnings and weak demand.
FPI selling due to high valuations and capital moving to more attractive markets like the US has put pressure on investor sentiment. Meanwhile, the rupee hit a new all-time low of 85.8.
Holland said, 'It is difficult to predict what will be the policy of Donald Trump after he takes over as the President of America, that is why FPIs would like to stay aside to keep their investments safe for now. The market performed very well in the first few days of January. That is why they are selling their investments.' The direction of the market will be determined by the earnings of companies in the December quarter, the general budget to be presented in February and the policy changes in America after Trump takes charge.
Nifty Midcap 100 fell 2.7 per cent, the biggest drop since December 20 last year. Nifty Smallcap 100 fell 3.2 per cent, the biggest drop since October 22, 2024. The decline in the stock market was extremely broad-based, with 3,530 stocks declining on the BSE while 611 stocks rose. Apart from HDFC Bank, ITC fell 2.8 per cent and Reliance Industries fell 2.7 per cent, which contributed to the decline in the Sensex.
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