The equity benchmarks slumped by nearly 1% on Monday, mirroring the trend in other Asian markets, as investors adopted a cautious stance ahead of the upcoming earnings season.
The BSE benchmark Sensex tumbled 670.93 points, or 0.93%, closing the day at 71,355.22. This decline was primarily fuelled by drops in FMCG, commodities, banks, and metal shares. The NSE Nifty 50 fell 197.80 points, or 0.91%, settling at 21,513. In intraday trades, the Sensex and Nifty saw declines of 725 points (1.01%) and 217.90 points (1%), respectively.
Notably, these indices are now more than 1.5% lower than their respective all-time highs recorded on the New Year’s Day. “Indian equities start 2024 amid an extreme bullish sentiment, with top-decile valuations and a record discount to debt yields.
Notwithstanding India’s exciting long-term growth story, this stretched starting point may weigh on returns this year,” CLSA strategist Vikash Kumar Jain had said in a report, ‘India Themes 2024’, on January 4.
“While India’s EPS growth should be steady, it will not be the fastest among top global markets. Yet, it is trading at the biggest relative premium. We believe equities are pricing in a ‘perfect’ US soft landing and any disappointment on growth or sticky inflation will hurt stocks.”
Among major Asian indices, Hong Kong’s Hang Seng fell by 1.88%, followed by China’s Shanghai Composite (down 1.42%), Indonesia’s Jakarta Composite (down 0.91%) , and South Korea’s Kospi (down 0.40%). On the other hand, Japan’s Nikkei showed a modest gain of 0.27%. The broader indices, BSE Midcap and BSE Smallcap, reported up to 0.87% decline.
The BSE Midcap Index dropped by 328.60 points or 0.87%, while the BSE Smallcap fell by 159.35 points or 0.36%, after reaching a new all-time intraday high. The BSE FMCG Index was the biggest loser among the sectoral indices, experiencing the steepest decline of 1.55% since September 28.
Other notable sectors with losses included commodities (down 1.44%), bankex (down 1.42%), metal (down 1.40%), and financial services (down 1.05%). The BSE IT Index fell by 0.90% ahead of the third-quarter results announcements by IT majors — TCS and Infosys — scheduled for January 11.
The advance-decline ratio stood at 0.87, with 1,855 stocks advancing and 2,123 stocks declining. Among the Sensex pack, SBI was the top loser with a 2.3% fall while ITC, Nestle India, Asian Paints, and Tech Mahindra declined by 1.8% each.
According to provisional data from the exchanges, FPIs were net buyers, amounting to Rs 16.03 crore on Monday, while domestic institutional investors net bought shares worth Rs 156 crore. Investors’ wealth eroded by Rs 2.9 trillion, reaching Rs 366.4 trillion.