Sensex Plummets 1,000 Points, Nifty Slips Below 23,700: HMPV Scare and Other Factors Spook D-Street

The stock markets faced a sharp downturn on January 6, with the Sensex nosediving 1,000 points and the Nifty dropping below the 23,700 mark. Weak quarterly updates, rising concerns over the HMPV virus, and broader economic uncertainties weighed heavily on investor sentiment, leading to the erosion of ₹8 lakh crore in market capitalization.

At 12:17 PM, the Sensex was down 944.44 points (1.19%) at 78,278.67, while the Nifty fell 292.25 points (1.22%) to 23,712.50. Declining stocks far outnumbered gainers, with 2,932 shares in the red and only 592 advancing.

Key Factors Driving Market Decline

1. HMPV Virus Concerns

The Indian Council of Medical Research (ICMR) recently reported two cases of Human Metapneumovirus (HMPV) in Bengaluru, triggering market jitters. The cases involve a 3-month-old female and an 8-month-old male, both admitted to Baptist Hospital. Notably, neither child has a history of international travel, suggesting domestic transmission.

ICMR emphasized that HMPV, which causes respiratory illnesses, is not new and has been reported globally, including in India. Current data from ICMR and the Integrated Disease Surveillance Programme (IDSP) shows no significant surge in influenza-like illnesses or severe respiratory infections.

Market analysts largely view today’s reaction as a knee-jerk response. Nirav Karkera, Head of Research at Fisdom, noted, "Unless the virus situation escalates significantly, the impact on markets is likely to remain limited."

2. Q3 Earnings Anticipation

The upcoming Q3 earnings season, set to begin on January 9 with Tata Consultancy Services, has added to the market's nervousness.

Vinod Nair, Head of Research at Geojit Financial Services, commented, “High valuations and a strong US dollar are driving a sell-on-rally sentiment. The market's direction will heavily depend on third-quarter earnings results.”

3. Strong Dollar Pressure

Emerging Asian currencies, including the Indian rupee, faced headwinds against a robust US dollar. The rupee hit an all-time low of 85.82 against the dollar, breaching its previous record of 85.8075 from late December.

The Chinese yuan also declined to a 16-month low, pressured by concerns over US-China trade tensions and a slow economic recovery. A resilient dollar, coupled with expectations of further Federal Reserve tightening, continues to weigh on emerging markets.

4. Broad-Based Selling Across Sectors

All major sectors experienced heavy selling, with PSU banks, metals, FMCG, and consumer stocks falling over 2%. The volatility index (India VIX) surged more than 13% to 15.36, reflecting heightened market uncertainty.

Outlook

While concerns over HMPV and Q3 earnings jitters have rattled the markets, experts believe the sell-off is primarily sentiment-driven. In the absence of further negative developments, the downside may be limited.