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The Indian stock market experienced a significant decline on Monday, with benchmark indices S&P BSE Sensex and NSE Nifty50 plummeting by as much as 2% during early trading. This sharp drop erased substantial investor wealth and created widespread panic on Dalal Street.
As of 1:24 PM, the Sensex had fallen by 1,310.69 points, trading at 78,413.43, while the Nifty50 was down over 400 points. This decline was mirrored by substantial losses in major stocks, including Reliance Industries Limited (RIL), Bajaj Auto, Adani Ports, Hero MotoCorp, ONGC, and Tata Motors.
RIL's shares dropped 3.54%, trading at Rs 1,291.20, largely due to profit booking by investors. Hero MotoCorp witnessed the most significant decline, plummeting 5.4%, followed by Bajaj Auto, which fell 4.66%. Other notable losers included ONGC, down over 4%, and Adani Ports, which saw a decline of 3.83%.
This bloodbath on Dalal Street can be attributed to a combination of factors, including a disappointing Q2 earnings season, heightened caution ahead of the upcoming US presidential elections, and persistent selling by foreign institutional investors (FIIs).
The impact of weak earnings has been pronounced, with major companies facing significant downgrades in their earnings forecasts, contributing to the negative sentiment among investors. For instance, BPCL reported a staggering 34.3% cut in its FY25 EPS projections following its Q2 results. This trend has left investors questioning the sustainability of current valuations, particularly as the Nifty's FY25 EPS growth is projected to fall below 10%.
“Given the prevailing conditions, FPIs may continue their selling spree in this challenging earnings environment, limiting the potential for any market recovery,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Moreover, as FIIs redirect their investments, the expectation of a stimulus package from China has further exacerbated capital outflows from India. Domestic institutional investors (DIIs), meanwhile, remain cautious and have stepped back from the market, contributing to the prevailing downward momentum.
With both Nifty and Sensex approaching their critical 200-DMA levels—around 23,500 and 77,000, respectively—analysts suggest that these points could serve as temporary bottoms if the selling pressure eases.
However, the current environment calls for investors to remain vigilant and focus on stocks with reasonable valuations and strong earnings momentum as they navigate this turbulent phase in the market.
Source: Stock market crash: Adani Ports, Reliance, Bajaj Auto among top losers