Market Mayhem: Investors lose Rs 7 lakh crore; Sensex hits 7-month low!

Sensex hits 7-month low, Nifty dips below 23,050 as Rs 7 lakh crore investor wealth vanishes

The Indian stock market faced a steep sell-off on January 21, driving the Sensex and Nifty to seven-month lows. The Sensex plunged 1,235.08 points (1.60%) to close at 75,838.36, while the Nifty shed 320.10 points (1.37%), ending the day at 23,024.65. Market-wide volatility erased Rs 7 lakh crore in investor wealth, according to exchange data.

Key Factors Driving the Sell-Off:

Broad Market Weakness: Both public and private sector banks witnessed heavy declines, alongside significant drops in auto stocks. Small and mid-cap indices bore the brunt, falling over 2%, outpacing losses in the large-cap segment.

Mixed Earnings: Disappointing Q3 results from several companies, including Dixon Technologies and Zomato, exacerbated the negative sentiment.

FII Outflows: Persistent foreign institutional investor (FII) outflows continued to dampen sentiment, leaving market participants cautious.

Top Gainers and Losers:

Losers: Trent, Adani Ports, NTPC, ICICI Bank, and M&M were among the biggest drags on the Nifty.

Gainers: Apollo Hospitals led the gainers, rallying 2% after Kotak Institutional Equities upgraded the stock to 'Buy,' citing its competitive positioning and diversified presence. BPCL, Tata Consumer, JSW Steel, and Shriram Finance also ended in the green.

Sectoral Performance:

Banks and Financials: The Nifty Bank and PSU Bank indices declined nearly 2%.

Realty: Nifty Realty suffered the most, dropping over 4%, led by losses in DLF, Oberoi Realty, and Phoenix Mills.

Auto and Metals: Nifty Auto and Metal indices were down 1%, with Maruti Suzuki, Tata Motors, and Bajaj Auto weighing heavily.

Consumer Durables and Energy: Both sectors dipped over 1%, reflecting broad-based weakness.

Disappointing Corporate Earnings:

Dixon Technologies: The stock plummeted nearly 14% after reporting a 47.5% YoY drop in net profit and a 9% decline in revenue for Q3 FY25.

Zomato: Shares tumbled over 10% following a 57% YoY fall in Q3 net profit, prompting analysts to revise earnings estimates downward.

Technical Insights:

Analysts noted critical resistance and support levels for the Nifty:

Resistance: Immediate resistance lies at 23,400, with a potential rally extending towards 23,700–23,750 if breached. However, a decisive trend reversal would require the Nifty to cross 24,000, breaking the descending trendline.

Support: Immediate support is at 23,150, followed by a stronger zone at 23,000–22,900, aligned with a falling wedge pattern.

Sameet Chavan, Head of Technical and Derivative Research at Angel One, emphasized the need for traders to monitor these levels and adjust their strategies accordingly.

Outlook:

Experts believe the market remains in an oversold zone, with any short-term recovery likely a reprieve rather than a broader uptrend. Investors are advised to adopt a stock-specific approach, prioritizing strong fundamentals and earnings visibility over expectations of a broad market recovery.

Disclaimer:

The views expressed here are those of market experts. Readers are advised to consult certified financial advisors before making investment decisions.