Indian Stock Market Plunges Over 1.5% Amid Global Concerns and Virus Outbreak
The Indian stock market experienced a sharp decline on Monday, January 6, as both the Sensex and Nifty 50 indices ended the session down over 1.5%. The sell-off was widespread, triggered by growing concerns over a new virus outbreak in China and global market weaknesses.
The Nifty 50 fell 1.6%, slipping below the crucial 24,000 mark to close at 23,616 points, while the Sensex ended 1.59% lower at 77,964. The broader market took an even harder hit, with the Nifty Smallcap 100 index plunging by 3.2% and the Nifty Midcap 100 index falling by 2.7%.
Sectoral Performance
All major sectoral indices finished the day in negative territory, with the Nifty PSU Bank, Nifty Metal, Nifty Energy, Nifty Realty, and Nifty Media indices experiencing the steepest declines, ranging from 2.51% to 4%.
Top Stock Movers
Among individual stocks, 46 out of 50 Nifty 50 constituents closed in the red. ITC emerged as the top laggard, dropping 8.1%, followed by Tata Steel and Trent, which each saw losses of over 4%. Other significant decliners included BPCL, Coal India, NTPC, Adani Enterprises, Bharat Electronics, Kotak Mahindra Bank, Power Grid Corporation, Adani Ports & SEZ, and Asian Paints, all falling by 3% to 4%.
Key Reasons for the Market Decline
- Weak Asian Markets
Most Asian markets closed lower, driven by concerns over potential changes in trade policies under US President-elect Donald Trump. His stance on raising tariffs on imports from China and other countries could dent global growth, particularly in trade-dependent Asian economies. Japan’s Nikkei 225 index dropped 1.5%, while Hong Kong’s Hang Seng fell by 0.3%, and the Shanghai Composite lost 0.2%. - Virus Outbreak
Investor sentiment was further dampened by news of a Human Metapneumovirus (HMPV) case detected in Bengaluru. The virus, which is similar to COVID-19, has caused a spike in respiratory illnesses in China. An 8-month-old child in Bengaluru tested positive, raising concerns about the potential spread of the virus, particularly among vulnerable populations such as young children and older adults. - Weakness in Heavyweight Stocks
The fall in major index heavyweights like Tata Steel, Reliance Industries, HDFC Bank, Kotak Mahindra Bank, ITC, and Tata Motors significantly contributed to the market’s decline. - Strengthening US Dollar
The US dollar continued to rise, reaching near two-decade highs against Asian currencies, further pressuring global equities. The dollar index was trading at around 108.74, reflecting its strength against a basket of major currencies. - Technical Breakdown
The Nifty 50 broke key support levels, which intensified the selling pressure. According to Prashanth Tapse, Senior VP (Research) at Mehta Equities, Nifty’s major support levels lie at 23,905 and 23,727, with inter-month support at 23,000. Resistance levels are seen at 24,321, 24,857, and 25,500, with a further hurdle at 26,277.
Outlook
With global uncertainties, particularly the political landscape in the US, and concerns over the virus outbreak, market volatility is expected to persist. Investors are advised to closely monitor key support and resistance levels and remain cautious in the short term.
Disclaimer: The views and recommendations above are those of individual analysts or broking companies, and not of us.
