Sensex, Nifty: 5 reasons why stock market is down today

Sensex and Nifty took a beating on a day six stocks plunged in the broader market on every single rise. A total of 324 stocks hit lower circuit limits, and the fear gauge India VIX soared 11 per cent, as two cases of human metapneumovirus (HMPV) have reportedly been found in India. China has been grappling with high cases of this virus that causes respiratory illness, but has no known vaccine.

FPI selling has continued, with NSDL data showing net outflows of Rs 4,285 crore in January so far. The upcoming earnings season is also making investors jittery. Add to that global cues are weak, with Asian markets falling up to 1.4 per cent today on firm dollar and US bond yields and a rise in crude oil prices to the highest level since October 2024. Lastly, ITC’s demerger of hotel business also weighed on largecap indices.

“An uncertain and risky global macro environment along with a near-term economic growth slowdown in India in the face of elevated absolute and relative valuations see us forecast muted returns for the Nifty in 2025,” CLSA said in its strategy note.

On Monday, Nifty was quoting at 23,774.85, down 229.90 points or 0.96 per cent. The BSE Sensex fell 733.05 points, or 0.93 per cent, to 78,490.06. A selloff was seen in smallcap and midcap indices that fell up to 2 per cent.

ITC Ltd shares were quoting at Rs 452 apiece on Monday morning, as the stock turned ex-date for demerger for the hotel business. The stock was adjusted by Rs 27 over its previous closing price of Rs 482 on BSE. This is against Rs 16-25 per share adjustments a few analysts were expecting before. It was a major contributor to Sensex and Nifty fall.

HDFC Bank Ltd shares were down 1.56 per cent at Rs 1,722 after the Q3 update. December was the third consequent quarter of sequential corporate loan decline as the banks continued to choose profitability over balance sheet growth.

Tata Steel fell 3.62 per cent to Rs 133.20. Kotak Mahindra Bank, Power Grid, Asian Paints, Adani Ports, Mahindra & Mahindra and IndusInd Bank fell over 2 per cent each.

“The market is likely to be influenced by the negative factors impacting FII flows and some positive domestic factors which can support the market. The external macro construct continues to be unfavourable with the dollar index at 109 and the 10-year US bond yield at 4.62 per cent. The FIIs are likely to continue selling till the yields decline and the dollar stabilises,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Vijayakumar said domestically the December auto numbers indicate that the much talked about urban demand deceleration is exaggerated. Buying will resume in these resilient domestic segments, supporting the market on declines, Vijayakumar said.

CLSA in a January 3 note said it added Tata Motors, NTPC, Nestle India and Britannia to its India focus portfolio while it removed HDFC Bank and notably cut its overweight in banks. “We remain overweight commodities and insurance. IT, discretionary, industrials and healthcare are our big underweights,” it said.