Benchmark equity indices recorded their biggest single-day loss in three months on Monday, as a barrage of bad news hits investor sentiment. Concerns over the human metapneumovirus (HMPV), disappointing Q3 business updates from banks and uncertainties surrounding new US economic policies were the key headwinds. At the same time, the fall in ITC stock due to the hotel business spinoff contributed as much as 25% to the Sensex’s decline.
As a result, both the Sensex and Nifty closed down by 1.59% (1,258.12 points) and 1.62% (388.70 points), respectively. With Monday’s fall, the benchmark indices have fallen 2.5% in the past two trading sessions, wiping out the 2.3% gains in the first two days of the calendar year.
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Even the broader markets suffered, with the BSE Midcap falling 2.44% and the BSE Smallcap declining 3.17%. The NSE’s volatility index, India VIX, surged 15.58%, the highest increase in the past five months. The broad-based sell-off led to an erosion of nearly `11 lakh crore in investor wealth.
While foreign portfolio investors (FPIs) continued their selling spree, offloading equities worth Rs 2,575.06 crore, domestic institutional investors (DIIs) provided some support, purchasing shares worth Rs 5,749.65 crore, according to provisional exchange data.
Headwinds for markets at the start of the year include higher US 10-year yields and a stronger dollar, the potential imposition of additional US tariffs on Asia-Pacific economies, and elevated economic policy uncertainty and geopolitical risk, Goldman Sachs strategists said in a note while trimming the MSCI Asia Pacific ex-Japan index’s target to 620 from 630, as per a Bloomberg report.
“The primary catalyst for the sharp sell-off in the domestic market appears to be concerns over HMPV,” said Vinod Nair, head of Research at Geojit Financial Services.
Among Asian markets, Japan and Indonesia were the major losers, falling up to 1.47%. Losses in Hong Kong and China were comparatively modest at 0.36% and 0.14%, respectively. On the other hand, Taiwan (+2.79%), South Korea (+1.91%), and Singapore (+0.53%) bucked the trend and posted gains.
Market breadth was negative, with more than five losers for every gainer. Broader indices underperformed the benchmarks.
All sectoral indices ended in the red. Utilities, power, PSU banks,
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