Over 3,300 stocks saw declines, wiping market capitalization down to ₹411.3 trillion
The Indian stock market experienced a steep decline on January 27, 2025, with major indices and broader markets showing substantial losses. The downturn was marked by widespread selling across large-cap, mid-cap, and small-cap stocks, reflecting heightened investor anxiety.
Major Indices Suffer Significant Losses
The BSE Sensex plunged 842.5 points in intraday trade, touching a low of 75,348. The Nifty50 on the National Stock Exchange also witnessed a sharp decline, falling 265.4 points to hit a low of 22,826.8. These declines highlight the intense selling pressure across the Indian equity market, as investors reacted to both domestic and global uncertainties.
Large-Cap Stocks Under Pressure
Large-cap stocks bore the brunt of the sell-off, with heavyweights like Power Grid, Tata Motors, Zomato, IndusInd Bank, HCL Tech, Tech Mahindra, TCS, Bharti Airtel, Infosys, Reliance Industries, L&T, Bajaj Finance, Bajaj Finserv, and HDFC Bank losing between 1% and 3.6%. The weakness in large-cap stocks dragged the broader indices lower, contributing significantly to the market's decline.
Broader Market Sell-Off Intensifies
The broader market saw even more severe declines, with the Nifty MidCap index plunging 2.7% and the Nifty SmallCap index plummeting 4% intraday. The sell-off in the mid-cap and small-cap space was more pronounced, as these segments tend to experience heightened volatility during bearish market conditions.
Key constituents of the small-cap index, including CreditAccess Grameen, Netweb Technologies India, Newgen Software Technologies, Alldigi Tech, Dhani Services, Tejas Networks, Solara Active Pharma Sciences, and K P Energy, witnessed sharp declines ranging from 10% to 18%. The significant losses in these stocks highlight the extent of the bearish sentiment in the market.
Weak Market Breadth
Market breadth was exceptionally weak, with over 3,300 stocks declining on the BSE compared to just 490 advancing stocks. This lopsided market breadth underscores the widespread selling pressure across sectors and market segments. The decline in market breadth reflects the broad-based nature of the sell-off, as investors reduced exposure across a variety of industries.
Market Capitalization Declines Sharply
The market capitalization of all companies listed on the BSE dropped significantly, falling to ₹411.3 trillion. The reduction in market capitalization highlights the scale of wealth erosion in the equity market, as stocks across sectors faced steep declines.
Sectoral Analysis
The downturn was evident across most sectors, with notable losses in IT, financials, energy, and auto. Large-cap IT firms like Infosys, TCS, and HCL Tech experienced sharp declines, driven by concerns about global demand and profit margins. Financial heavyweights such as HDFC Bank, Bajaj Finance, and IndusInd Bank also faced significant selling pressure, weighing heavily on the broader indices.
Auto stocks, including Tata Motors and Mahindra & Mahindra, declined amid concerns over slowing consumer demand and input cost pressures. Energy stocks like Reliance Industries and Power Grid were also not immune to the bearish sentiment, with investors offloading positions in these sector leaders.
Small-Cap and Mid-Cap Performance
The sell-off in the broader market was particularly severe, with small-cap and mid-cap stocks seeing sharp declines. Stocks such as CreditAccess Grameen and Dhani Services, which had previously been market favorites, were among the worst performers. The significant losses in these stocks highlight the heightened volatility and risk aversion in the small-cap and mid-cap space.
Global and Domestic Factors Impacting Sentiment
The sell-off in the Indian stock market can be attributed to a combination of global and domestic factors. Global uncertainties, including concerns about slowing economic growth, geopolitical tensions, and rising interest rates, have weighed on investor sentiment. Domestically, mixed corporate earnings and a cautious outlook from market participants ahead of the upcoming Union Budget have added to the nervousness in the market.
The broader market decline also reflects concerns about liquidity, with foreign portfolio investors (FPIs) continuing to withdraw funds from Indian equities. Rising U.S. Treasury yields and a stronger dollar have further dampened appetite for emerging market assets, including Indian equities.
Outlook for the Market
The steep declines in both large-cap and broader market indices highlight the fragile sentiment in the Indian equity market. The upcoming Union Budget and key global economic events will likely play a pivotal role in determining the market's direction in the near term. Investors are expected to closely monitor announcements and macroeconomic indicators to assess the potential impact on corporate earnings and overall market sentiment.
The bearish trend in the broader market and sharp declines in small-cap and mid-cap stocks suggest heightened caution among investors. Market participants are likely to remain watchful of global developments and domestic policy measures in the coming weeks.