Sensex tumbles 1,258 points over HMPV fears, global uncertainties

The Indian stock market witnessed a steep decline on Monday as domestic benchmark indices plunged more than 1.5 per cent amid growing concerns over human metapneumovirus (HMPV) along with global uncertainties.

Heavy selling was seen in the PSU bank sector on Nifty. The PSU bank sector was down by more than 4 per cent. Apart from this, the realty, metal, energy, PSE, and commodities sectors also fell by more than 3 per cent.

Sensex ended at 77,964.99, down 1,258.12 points or 1.59 per cent and Nifty settled at 23,616.05 down 388.70 points or 1.62 per cent. The intraday low of Sensex was 77,781.62, while the intraday low of Nifty was 23,551.90.

Nifty Bank ended at 49,922 down by 1,066.80 points, or 2.09 per cent. The Nifty Midcap 100 index closed at 56,366.9 after declining 1,564.10 points, or 2.70 per cent, while the Nifty Smallcap 100 index closed at 18,425.25 after declining 608.45 points, or 3.20 per cent.

According to market experts, the primary catalyst for a sharp sell-off in the domestic market appears to be concerns over the HMPV.

“Emerging markets are undergoing consolidation due to uncertainties surrounding new US economic policies, the Fed’s hawkish stance on future rate cuts, potential upward revision for CY25 inflation, and a strong dollar, all of which are negatively impacting market sentiment,” said experts.

On the Bombay Stock Exchange (BSE), 657 shares ended in green and 3,472 shares in red, whereas there was no change in 115 shares. On the sectoral front, all sectors ends in red.

In the Sensex pack, Tata Steel, NTPC, Kotak Mahindra Bank, PowerGrid, Zomato, IndusInd Bank, Asian Paints, Reliance, M&M, UltraTech Cement, HDFC Bank, Nestle India and the SBI were the top losers. Titan, HCL Tech and Sun Pharma were among the top gainers.

According to Karthick jonagadla, Founder and CEO of Quantace Research, Nifty has closed below its critical 200-day exponential moving average (200 DEMA) of 23,650.

“We maintain a constructively positive outlook, anticipating an upside of 5-6 per cent for the Nifty Index in the near term if key levels are reclaimed and sentiment improves,” he maintained.

 The Indian stock market turned red in the afternoon trading session on Monday after opening in the green.

Both the benchmark indices fell by more than 1 per cent. All sectoral indices were trading in the red. Nifty PSU Bank was trading in the red with a decline of more than 3 per cent.

Auto, metal, reality and media sectors were down by more than 2 per cent.

At around 12:00 pm, the Sensex was trading at 77,979.54 after declining 1,243.57 points or 1.57 per cent, while Nifty was trading at 23,607.35 after declining 397.40 points or 1.66 per cent.

On the National Stock Exchange (NSE), 291 stocks were trading in the green, while 2,221 stocks were in the red.

According to experts, the market is likely to be influenced by the negative factors impacting FII flows and some positive domestic factors which can support the market.

“The external macro construct continues to be unfavourable with the dollar index at 109 and the 10-year US bond yield at 4.62 per cent. The FIIs are likely to continue selling till the yields decline and the dollar stabilises,” they noted.

Foreign Institutional Investors (FIIs) sold equities worth Rs 4,227.25 crore on January 3 and domestic institutional investors bought equities worth Rs 820.60 crore on the same day.

Morgan Stanley expects India to be one of the best performing emerging markets in 2025, with a base case projection for Sensex to rise by 18 per cent by December end.

In its latest note, the US-headquartered investment bank sees 18 per cent base case upside for the BSE Sensex by the December end.

“India’s macro stability is strong due to improving terms of trade and flexible inflation target,” said the global brokerage, forecasting earning of 18-20 per cent earning growth over the next four to five years.

Private capital expenditure cycle, re-leveraging of corporate balance sheets and unfolding of a structural rise in discretionary consumption are among reasons for this. A reliable source of domestic risk capital also contributes to the capital expenditure Infrastructure spending, restructuring GST rates, direct tax reforms, more free trade agreements, and focus on energy transition are other areas that will contribute to India’s macro stability, said Morgan Stanley in its note.

As far as interest rates are concerned, Morgan Stanley expects a shallow cycle of 50 basis points with the rate cuts starting from February. It expects two consecutive rate cuts of 25 bps each.

The Reserve Bank of India (RBI) is now committed to durable liquidity. Regulatory tightening may loosen in the weeks ahead, according to the brokerage. Initial issuance in the Indian markets is running at about 1.3 per cent of GDP versus the previous peak of over 3.5 per cent and set to rise further, Morgan Stanley said in the note.

Agencies