Indian benchmark indices ended lower for the fourth straight session on Wednesday, eroding investors’ wealth by around ₹5.64 lakh crore in the four trading days as persistent concerns about higher interest rates and escalating Russia-Ukraine tensions spooked investors' sentiments. The market sentiment was further dented by weak global cues, continued fall in Adani group stocks as well as index heavyweights such as Reliance Industries, HDFC Bank, Wipro, and Bajaj Finance.
The BSE Sensex slipped below the 60,000 mark today, registering its biggest one-day fall in a month, with investors losing nearly ₹4.27 lakh crore in wealth. The 30-share index ended 928 points, or 1.53%, lower at 59,745, while the NSE Nifty settled down by 272 points, or 1.53%, at the 17,554 mark. The broader market also saw selling pressure, with the BSE MidCap and SmallCap indices closing 1% lower each. India VIX, a volatility index based on the NIFTY Index Option prices, surged 12%.
Among individual stocks, barring ITC, all shares in the BSE Sensex pack closed in red, led by Bajaj Finance, Bajaj Finserv, Reliance Industries, Wipro, and HDFC Bank, which dropped between 2-3%.
On the sectoral front, all indices ended in negative terrain, led by power and realty space.
Here are five factors that triggered sell-off in the share market:
Weak global markets
The sell-off in Indian equities was in sync with the global peers as the market in Asia ended in red, while the European market opened lower, tracking overnight losses on Wall Street, which suffered its worst day so far in 2023 on Tuesday. The S&P 500 plunged 2%, while the Dow Jones Industrial Average and the Nasdaq composite lost 2.1% and 2.5%, respectively. The sell-off was triggered by stronger than expected economic data in the U.S., which raised fear that the central bank may continue its future rate hike plan. Investors also awaited the release of the minutes of the Federal Open Market Committee (FOMC) meeting, which may give some indications about the Federal Reserve’s future monetary policy.
Investors also weighed rising geopolitical tensions after U.S. President Joe Biden’s surprise visit to Kyiv, his first since Russia launched its invasion of Ukraine almost a year ago. A day after Biden’s visit to Kyiv, Russian President Vladimir Putin suspended Moscow’s participation in the last remaining nuclear arms control pact with the United States and announced that Moscow would not change its strategy in the war in Ukraine.
RBI minutes of meeting
Investors also kept a close eye on the Reserve Bank of India’s minutes of its February policy meeting, which is slated to be released later today. The minutes will provide some signals about the central bank’s future rate hike plans. Besides, RBI Deputy Governor Michal Patra's speech at the first G20 Finance Ministers and Central Bank Governors meeting will also be watched. In the last policy meeting, the Monetary Policy Committee (MPC) of the RBI hiked the repo rate by 25 basis points to 6.50% in a bid to control retail inflation, which remained above the RBI’s threshold limit of 6%.
Free fall in Adani Group stocks
The continued fall in Adani Group stocks also injected negativity in the market. On Wednesday, all nine Adani group stocks settled lower, with Adani Total Gas, Adani Power, Adani Green Energy, and Adani Transmission hitting their 5% lower circuit limits on the BSE. While Adani Enterprises, the flagship company of the group, was the biggest loser with 11% loss, Adani Power snapped four sessions-gaining streak. Gautam Adani-controlled nine listed companies lost a total m-cap of around ₹51,291 crore today. In the selloff that began on January 24, Adani group stocks suffered a cumulative loss of ₹11,61,555 crore in the last nineteen sessions, from ₹19,18,058 crore to ₹756,502 crore, which is nearly equivalent to joint m-cap of ICICI Bank (₹5,85,244 crore) and Hindustan Unilever Ltd (₹5,85,824 crore), the fifth and sixth largest companies in terms of BSE.
Sustained selling by FIIs
Foreign investors' selling spree amid the Adani saga and rising inflation also remains a concern for the market. However, the market witnessed some trend reversal on Tuesday, with foreign institutional investors (FIIs) turning net buyers on the Indian stock market after two consecutive days of selling. As per the data of NSDL, FIIs made a net purchase of ₹5,466 crore in equities on Tuesday and sold to a gross of ₹4,940 crore, registering a net inflow of ₹526 crore.