Indian markets witnessed a sharp downturn on Tuesday, with the Nifty 50 falling below 22,700 to 22,673.85, a 0.47% decrease, and the Sensex dropping to 72,385.06, down 0.53%. This extended Monday's steep selloff, which saw the Nifty lose 360 points and the Sensex shed 1,124 points. Both indices have now reached their lowest levels in nearly six months, contributing to a $4.38 lakh crore loss in market value across BSE-listed stocks within 90 minutes of trading.
The market decline is attributed to several factors, including persistent foreign institutional investor (FII) outflows, with FIIs offloading over $5,353 crore in equities on Monday. Domestic institutional investors (DIIs) provided some cushioning with net purchases of approximately $5,189 crore. The rupee's depreciation against the dollar, soaring Brent crude prices above $106 per barrel, and rising US 10-year Treasury yields (reaching 5.25%) are also contributing to the negative sentiment.
Sectorally, PSU Banks were the biggest laggards, with their index falling 3.15%. The Bank Nifty dropped 1.99% to 54,471.65, breaking below the key 55,000 level. Broad-based selling was evident, with 432 out of 500 Nifty 500 stocks ending in the red. The India VIX, a fear gauge, surged 12.15% to 13.6375, indicating increased near-term volatility. Analysts note that while the market is in "temporarily oversold territory," a sustained weakness below Nifty 22,800 could keep sentiment subdued, with resistance seen at 22,950–23,000.
Among individual stocks, Tata Motors (TMPV) was the steepest decliner, falling 2.27%, followed by HDFC Life Insurance (-1.99%), Bajaj Finance (-1.43%), Trent (-1.29%), and HDFC Bank (-1.24%). Conversely, pharma stocks showed some resilience, with Dr. Reddy's Laboratories rising 1.98%, Cipla gaining 1.02%, and Sun Pharmaceutical advancing 0.76%. Analysts suggest that despite cheaper valuations, the market's recovery hinges on corporate earnings validating margin resilience, especially given the pressures from imported energy and dollar funding.
