Rs 9.1 lakh crore wiped out! Sensex crashes 1,200 pts, Nifty in correction territory; all sectors bleed

Tech Mahindra, IndusInd Bank, Trent, Axis Bank, and Tata Motors were the top losers on the Nifty.

The Nifty plunged into a technical correction on December 20, shedding 10 percent from its all-time high, while the Sensex tumbled nearly 1,300 points from its intraday peak amid widespread sectoral weakness. Investors saw a staggering Rs 9.1 lakh crore in wealth wiped out, marking the steepest weekly fall in two years. Nifty IT emerged as the biggest laggard, dropping over 2 percent, even as Accenture’s strong first-quarter earnings failed to lift sentiment.

At close, the Sensex was down 1,166 points or 1.5 percent at 78,041 while the Nifty tanked 320 points or 1.4 percent at 23,631. About 1,022 shares advanced, 2,9454 shares declined, and 104 shares were unchanged.

"Today's fall in the market should be attributed to a sharp rise in FII selling," Ajit Mishra, Senior Vice President at Religare Broking said. He added that the US Fed's hawkish tone on interest rate cuts in 2025 has further dampened the mood in the market. Markets were anticipating three cuts in the next fiscal and we're still not sure if we would get two rate cuts, Mishra added.

Foreign institutional investors have sold off holdings worth Rs 8,000 crore over the past three sessions, reigniting fears that FPIs could sell holdings like they did in October. For the year so far, FIIs have net sold Rs 2.94 lakh crore worth of shares.

The Nifty IT index tumbled 2.6 percent, erasing early gains of nearly 1 percent, as profit booking took hold. Losses in heavyweights like TCS, Infosys, Wipro, and Coforge weighed on the index, despite overnight gains of 2-3 percent in Infosys and Wipro's ADRs on the NYSE, fueled by Accenture's upbeat outlook. Other major indices, including Nifty Bank, PSU Bank, Auto, and Realty, fell up to 2 percent. Nifty Bank was dragged down by HDFC Bank, ICICI Bank, SBI, and Axis Bank.

In a dramatic shift, early gains in Nifty Energy, Pharma, and Metal, which had risen nearly 1 percent each, reversed sharply in the afternoon as selling pressure pushed them deep into the red with losses of nearly 2 percent each.

India VIX, the barometer to asses market anxiety, ended 4 percent higher to close above the 15 levels.

The Nifty mid-small cap indices mirrored weak trends with losses of 2.9 and 2.2 percent, respectively. Mishra added that certain pockets are overvalued and investors should be selective and opt for the bottom-up approach where companies show valuation comfort and revenue visibility.

Among individual stocks, shares of Siemens were sharply lower by 10 percent after analysts were disappointed by the fine print of the investor call, which alluded to a stagnant private capex, and concerns regarding the supply chain for digital industries. In the call with analysts, the company confirmed that the 'private capex has not picked up meaningfully', souring the sentiment for the share price.

RBL Bank shares tanked over 7 percent, falling for a staggering seventh trading session in a row. The sharp plunge comes after Morgan Stanley Research downgraded its price target for the lender. Morgan Stanley also lowered its earnings projections for RBL Bank, cutting forecasts by 1 percent for fiscal 2025, 9 percent for fiscal 2026, and 2 percent for fiscal 2027.

Mazagon Dock Shipbuilders also tumbled over 6 percent, extending the fall for a third session in a row. The decline comes after the stock recovered 36 percent from the lows of November. For its stock split, the company has decided on December 27, 2024, as the record date. The state-run shipbuilder will split one share of Rs 10 into two shares of Rs 5 each.

The Nifty extended its losses for a fourth straight session yesterday but found support near 23,870, the level seen during the November 28 derivatives expiry. This area also aligns with the 61.8 percent retracement of the November-December rally and the rising 200-day moving average. The three-day RSI, a momentum indicator, dropped below 10, a level that has historically signalled either a pause in the downtrend or a short-term recovery, says Akshay Chinchalkar, Head of Research at Axis Securities.

Tech Mahindra, IndusInd Bank, Trent, Axis Bank, and M&M were the top losers on the Nifty. On the other hand, Dr Reddy's Labs, Nestle India, ICICI Bank JSW Steel, and HDFC Life Insurance ended with marginal gains.