Sensex, Nifty Drop Over 1.5% Due to FPI Selling, Virus Fears

On Monday, the Indian stock market saw a sharp fall, with the Sensex and Nifty both dropping by 1.6%. This decline was mainly due to concerns about a new virus, weaker corporate earnings in the third quarter, and continued selling by foreign investors. The market Strongest match, which is the total value of all listed shares, fell by Rs 10.98 lakh crore, bringing the total to Rs 438.79 lakh crore.

The Sensex, which tracks 30 of the largest companies on the Bombay Stock Exchange, dropped 1,258.12 points, or 1.59%, ending at 77,964.99. During the day, it had lost as much as 1,441.49 points. Similarly, the Nifty 50, which is made up of 50 top companies, lost 388.7 points, or 1.62%, to finish at 23,616.05.

The fears surrounding the human metapneumovirus (HMPV), a new virus that was recently detected in India, added to the negative mood in the market. Two cases of the HMPV were found in Bengaluru, one in a three-month-old girl and another in an eight-month-old boy. Another case was reported in Ahmedabad, where a three-month-old baby tested positive. The virus has made investors anxious, leading to more selling.

Santosh Meena, the head of research at Swastika Investment, explained that these fears were contributing to the bearish market sentiment. He mentioned that after a brief rally, the market started to face fresh selling due to these concerns. 

Apart from the virus, analysts are also worried about slow earnings in the upcoming third-quarter reports. They expect weak government spending and low demand to affect the results of many companies. This uncertainty has caused foreign investors to sell off Indian shares. On Monday alone, foreign portfolio investors (FPIs) sold shares worth Rs 2,575.06 crore. However, domestic investors bought local shares worth Rs 5,749.65 crore, according to data from the Bombay Stock Exchange (BSE).

The market saw profit booking across all major sectors, with public sector banks and the capital markets sector being hit the hardest, losing over 3.5%. Both the Nifty and Bank Nifty fell below their 200-day moving averages (DMA) on Monday, indicating a weak market trend. The Nifty PSU Bank index dropped by 4%.

In January 2025, foreign investors have already sold Rs 7,160 crore worth of Indian stocks. The sell-off is attributed to the strengthening of the US dollar, higher US bond yields, and expectations that corporate results will not be strong.

Shrikant Chouhan from Kotak Securities suggested that the market is in a weak position but may be oversold, meaning it could be due for a bounce-back. He recommended that day traders focus on level-based trading, with the market likely to remain weak unless it breaks certain levels. He mentioned that if the market stays below 23,750 for Nifty or 78,200 for the Sensex, the negative sentiment would continue. If the market goes below these levels, it could fall further to 23,500 or 77,600. However, if the market rises above these levels, it may see a bounce-back to the 23,900-23,950 range for Nifty or 78,600-78,800 range for Sensex.

The market is expected to stay volatile until the concerns about the virus and corporate earnings begin to ease.

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