Sensex plunges 655 points to slip below 75K, Nifty down 168; Infosys, TechM, HCLTech, TCS lead IT sell-off
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Indian benchmark indices saw heavy selling pressure in early trade on Wednesday, with the Sensex falling slipping below psychological level of 75K and the Nifty50 dropping as much as 168 points, as elevated crude oil prices and escalating geopolitical tensions reignited concerns over inflation, corporate margins and India’s external balances.
In the first hour of trade so far, the BSE Sensex declined 655 points, or 0.86%, to hit a low of 74,923.08, while the Nifty50 tumbled 168 points, or 0.71%, to 23,466.65.
At 10:22 am, the Sensex was down 487.95 points, or 0.65%, at 75,089.63, while the Nifty50 traded 112.30 points, or 0.48%, lower at 23,521.95.
The broader market also remained weak, with the Nifty Midcap 100 and Nifty Smallcap 100 declining 0.53% and 0.37%, respectively.
Among the Sensex constituents, Infosys, Tech Mahindra, HCL Technologies and TCS were the biggest laggards, falling between 2.35% and 3.61%. HDFC Bank, Hindustan Unilever, M&M, Bharti Airtel and ICICI Bank were also among the major losers.
On the other hand, Adani Ports, NTPC, Larsen & Toubro, Trent and Tata Steel were among the top gainers, rising up to 2.21%.
The Nifty IT index was the biggest sectoral laggard, falling 2.78%, while the Nifty Metal index gained 0.98%.
What triggered sell-off in the market?
“Two strong headwinds are impacting the market now. One, Brent crude around $100 amidst escalating US-Iran tensions is weighing on the economy. Two, the booming IPO market is sucking liquidity out of the market resulting in sustained downtrend in the Nifty. Perhaps, the latter is impacting the market more than the former,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
He said listing gains from IPOs, which have increased to about 22% since June, are drawing both retail and institutional investors towards the primary market. “Even FIIs who have sold equity for ₹2.84 lakh crore through the exchanges so far this year have put in about ₹36,000 crore in IPOs so far this year,” he said.
“Everyone is riding the momentum in the IPO market. This frenzy has pushed up the IPO valuations, too. IPOs are getting subscribed irrespective of valuations. Investors have to be discreet while applying for IPOs,” Vijayakumar said.
“There are good and reasonably priced IPOs. Investors can apply for these. But instead of blindly applying for all IPOs driven by FOMO, investors can now accumulate fairly valued stocks, particularly large-caps in growth sectors,” said Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm.
“Investing in these segments and waiting patiently will reward investors handsomely while many IPOs run the risk of going below the issue price. Discretion is the better part of FOMO,” he added.
Crude prices, geopolitical tensions remain in focus
According to analysts, elevated crude oil prices and persistent geopolitical tensions continue to dominate the market narrative.
Oil remains the principal macro driver. WTI crude is holding in the $94-95 per barrel range after the latest escalation in hostilities across the Middle East heightened fears of further disruptions to global energy supplies. With no clear signs of de-escalation, the geopolitical risk premium embedded in crude prices is expected to remain elevated, keeping volatility across global financial markets high.
Investors will also continue to monitor developments in the region after fresh attacks involving Houthi militants and reports of US strikes targeting Iranian tankers reinforced concerns over the security of energy shipments. Any further escalation around key shipping routes is likely to remain a significant source of uncertainty for global markets.
In the Asian markets, Japan’s Nikkei 225 was trading marginally higher and South Korea’s Kospi gaining more than 0.5% in early trade.
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