Sensex-Crashes-

Mid & Small Caps Crash 20% from Highs, BSE Indices Drop 2-3% as Selling Pressure Intensifies, Rs 24 Lakh Crore Lost in Six-Day Selloff

 

The Indian stock market experienced another significant drop on February 12, with the Sensex plummeting over 700 points and the Nifty falling below 22,900. Mid-cap and small-cap indices entered bear market territory after declining nearly 20% from their all-time highs. This selloff marked the sixth consecutive session of losses, driven by global trade tensions, inflation worries, and profit-taking.

 

Market Bloodbath Wipes Out Rs 7 Lakh Crore

 

Benchmark indices remained firmly under the clutches of the sell-off, with market capitalization worth Rs 7 lakh crore getting wiped out in one session. The losses in the last six trading days aggregated to Rs 24 lakh crore. By 10:10 AM, the Sensex was trading at 75,547, down 745 points (0.9%), and the Nifty was at 22,850, down 221 points (0.9%). Two stock declines for every one rise, as 2,829 shares traded in the red versus only 455 gainers.

Broader markets continued to underperform, with the BSE Midcap and BSE Smallcap indices slipping 2-3%. The Nifty Midcap index has lost over 18% since its peak in September 2024, while the Small-cap index has fallen more than 20% from its all-time high in December 2024.

 

Global Factors Add to Market Weakness

 

Investor sentiment weakened further after U.S. Federal Reserve Chair Jerome Powell signaled no urgency to cut interest rates. Powell highlighted persistent inflation risks, indicating that rate reductions would depend on economic data. Concerns over U.S. tariffs on steel and aluminum imports also weighed on global markets. President Donald Trump’s latest trade policies have sparked fears of retaliatory measures, impacting India’s export-driven sectors.

Adding to the market’s woes, FIIs have pulled out Rs 17,129.5 crore from Indian equities in February alone. This outflow signals an increasing appetite for risk aversion amid global uncertainties.

 

Key Sectoral and Stock Performances

 

The Nifty Auto, Energy, Media, Oil & Gas, and Realty indices declined by 2-3%. The stocks most affected include Hero MotoCorp, M&M, ITC, and Reliance Industries, which dropped between 1-2%. On the contrary, the technology stocks helped minimize losses, with TCS, Infosys, HCLTech, Tech Mahindra, and Wipro each rising 1% or so.

This sector has witnessed large selling in mid- and small-cap stocks. Ircon International decreased 8% after posting a 64.6% decline in net profit for Q3, while Gopal Snacks came under pressure, plunging 8% after a net profit plunge of 70% due to soaring costs.

 

Upcoming Inflation Data and Market Outlook

 

Investors are now concentrating on inflation numbers in India, which they expect will decrease to 4.6% for January. Any lower inflation would give the Reserve Bank of India leeway to respond to slowing economic growth. Analysts feel market sentiment will be expected to remain cautious before inflation announcements from India and the USA.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, stated that Nifty has to scale the 200-DMA at 24,046 to regain strength, while any breach below 23,000 shall put to firmness its downside risks. Meanwhile, Ruchit Jain, VP at Motilal Oswal, believes that mid and small-cap stocks will continue to underperform until the earnings season clarifies the corporate performance.

With all the pressures exerted by global trade worries, lackluster Q3 earnings, and FII outflows, investors may have to gear up for more volatility in the near term.