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The Indian stock market experienced a significant downturn on January 13th, marking the fourth consecutive day of losses. The Sensex plummeted by 1,048.90 points (1.36%), closing at 76,330.01, while the Nifty fell by 345.55 points (1.47%), settling at 23,085.95. This sharp decline resulted in a substantial erosion of investor wealth, estimated at approximately Rs 12.39 lakh crore. The market capitalization of BSE-listed companies decreased to Rs 417.28 lakh crore from Rs 429.67 lakh crore in the previous session. The broad-based sell-off affected various sectors, with the realty index suffering the most, experiencing a significant 6.7 percent drop. Other sectors such as oil & gas, power, PSU, metal, and media also witnessed considerable losses, ranging from 3 to 4 percent. This widespread decline reflects a negative market sentiment driven by several contributing factors.
The substantial fall in the midcap and smallcap indices further underscores the severity of the market downturn. The Nifty Midcap index plummeted by 4 percent, marking its largest single-day decline since June 2024. Similarly, the Smallcap Index also suffered a 4 percent drop, its most significant fall in five months. This indicates that the sell-off was not limited to large-cap stocks but affected a broad range of companies. The significant number of stocks hitting their 52-week lows – nearly 490 on the BSE – highlights the widespread pessimism and underscores the extent of the market correction. Notable among these were Adani Wilmar, Shree Renuka Sugars, Tube Investment, SJVN, GMR Airports, IOC, L&T Finance, Engineers India, Hindustan Copper, Central Bank of India, Mishra Dhatu, Astral, BHEL, SAIL, UCO Bank, Rajesh Exports, Laxmi Organic, NMDC Steel, and many others. This widespread impact points towards a deeper underlying issue affecting investor confidence.
Analysts attribute the market's decline to a confluence of factors. Rising crude oil prices, reaching a three-month high, added to the pressure on already weakened investor sentiment. Furthermore, the weakening of global markets and a reassessment of US rate cut expectations for 2025 contributed to the bearish trend. The sell-off was particularly pronounced in heavyweight stocks across various sectors, indicating a lack of support from major market players. Aditya Gaggar, Director of Progressive Shares, described the situation as “mayhem,” highlighting the relentless selling pressure and the index's descent to a seven-month low. He noted the strong bearish candle on the daily chart as a sign of a prevailing bearish trend, but also pointed out that the index's approach to long-term trendline support at 22,800 might signal a potential reversal, given the market's entry into oversold territory.
Ajit Mishra, SVP of Research at Religare Broking, characterized the decline as a sharp intensification of the ongoing corrective phase. He emphasized the sustained selling pressure on heavyweight stocks and the index's closure near its daily low. He highlighted the broad-based nature of the sell-off, impacting sectors like realty, metal, and energy particularly severely. Mishra noted that the Nifty's decisive break below the November 2024 low of 23,263.15, coupled with increased volatility, signals further downside risks. He identified the 22,700 level as the next significant support, while acknowledging the possibility of brief pauses due to oversold conditions in certain heavyweight stocks. His advice to traders is a 'sell on rise' approach, emphasizing risk management. He also highlighted the relative stability of IT, FMCG, and select pharma stocks compared to the broader market pressure.
Rupak De, Senior Technical Analyst at LKP Securities, echoed the bearish sentiment, noting the Nifty's breach of crucial levels and the indication of increasing bearishness from its slip below the previous swing low. However, he also emphasized the significance of the 23,000 mark, suggesting that sustained trading above this level in the coming days could indicate a potential recovery. Conversely, a decisive fall below this level could trigger a more substantial correction. The diverse opinions and analyses highlight the complexity and uncertainty surrounding the current market situation, underlining the need for cautiousness and informed decision-making by investors.
Source: Taking Stock: Bears tighten grip; Sensex sheds 1,049 pts, Nifty below 23,100