Bloodshed On D-Street: Sensex & Nifty Plunge 1% Each, Midcaps Crack 3%; Why Is Market Down Today?

On October 25, 2024, the Indian stock market faced significant turbulence as the Sensex and Nifty opened flat but quickly slid into negative territory, primarily driven by a combination of disappointing earnings reports and ongoing foreign outflows. IndusInd Bank emerged as the worst performer on the Nifty 50 index, with its shares plummeting by 19% after the bank reported a 39% year-on-year decline in its net profit for the second quarter of FY25, which fell to Rs 1,331 crore.

The broader market sentiment has been under pressure from various headwinds, including lacklustre quarterly earnings from several companies, relentless selling by Foreign Institutional Investors (FIIs), rising tensions in the Middle East, and uncertainties surrounding the upcoming US elections. As of 11:15 am, the Sensex was down 570 points or 0.72% at 79,672, while the Nifty dipped 230 points or 1% to 24,235. A total of 741 shares advanced, while 2,112 shares declined, with 113 remaining unchanged.

This week alone, the Nifty 50 and Sensex have seen declines of 1.8% and 1.4%, respectively, marking a potential fourth consecutive week of losses- a streak not seen since August 2023. In the broader market, the BSE Midcap and BSE Smallcap indices fell nearly 2%, indicating continued struggles in these segments. Analysts suggest that pain persists in the midcap and smallcap sectors, particularly as earnings have yet to align with valuations, raising concerns about potential further declines.

Sectoral performance reflected the overall market mood, with indices such as Nifty Bank, Auto, PSU Bank, and Metal suffering the most, each dropping between 1.5% and 2.5%. Notable decliners on the Nifty 50 included IndusInd Bank, NTPC, Shriram Finance, Mahindra & Mahindra (M&M), and Larsen & Toubro (L&T), which reported losses ranging from 1% to 10%. Conversely, some stocks managed to buck the trend, with ITC, Axis Bank, HCLTech, Kotak Mahindra, and Britannia emerging as top gainers, witnessing increases between 1% and 4%. ITC's performance was fueled by robust growth in cigarette volumes and a booming hotel business, driving its shares up over 4%.

The overall market capitalization of firms listed on the Bombay Stock Exchange (BSE) plummeted to nearly Rs 435 lakh crore, down from approximately Rs 444 lakh crore in the previous session. This dramatic decline translated into a loss of about Rs 9 lakh crore for investors in just one day. The volatility index, India VIX, spiked over 7% during the session, reflecting heightened nervousness among market participants.

The Nifty Midcap Index alone shed another 1,000 points during Friday's trading, marking the fourth instance in October where the Midcap index has dipped by over 1,000 points in a single session. Additionally, on October 17, the Midcap index experienced a notable fall of 985 points. With Friday's drop, the Nifty Midcap index has now declined over 6,000 points from its record high of 60,924 reached on September 24, just a month prior.

IndusInd Bank's sharp decline has pushed it out of the top 10 most-valued lenders by market capitalization. The bank's stock experienced its steepest fall since March 2020, reaching an over one-year low of Rs 1,065 per share. As a result, the lender's market capitalization has dropped to Rs 81,000 crore, relegating it to the 12th position among the most valued banks. In contrast, Canara Bank, IDBI Bank, and Union Bank have moved into the top tier.