The Sensex and Nifty plunged over 1 percent on October 22, as a broad-based sell-off gripped the markets amid heightened volatility. Financials, oil & gas, and auto stocks faced the major brunt of the bearish sentiment in the domestic market.
A sharp rise in US bond yields, signalling lower expectations for aggressive rate cuts by the US Federal Reserve, also impacted fund flows to emerging markets like India.
By the close, the Sensex shed 931 points or 1.2 percent, settling at 80,220, while the Nifty fell 309 points or 1.3 percent, ending at 24,472. About 553 shares advanced, 3,264 shares declined, and 72 shares remained unchanged.
"Markets witnessed higher volumes on a down day even as investors disappointed with underwhelming Q2 numbers sold stocks regardless of prices to protect whatever profits are left on the table for them," said Deepak Jasani, Head of Retail Research at HDFC Securities.
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Indian markets have been struggling amid a lacklustre earnings season, persistent FII selling, and global market weakness, particularly due to the ongoing Middle East conflict.
Foreign Institutional Investors (FIIs) have been consistently pulling out funds from Indian equities and redirecting them to China, where recent stimulus measures and cheaper valuations have made the market more attractive. FIIs have been net sellers throughout October.
FIIs have been net sellers throughout October, offloading shares worth Rs 82,479.7 crore as of October 21, while Domestic Institutional Investors (DIIs) have stepped in, buying shares worth Rs 77,402 crore.
October has been brutal for the indices, with the Nifty down nearly 5 percent and the Sensex sliding over 4 percent.
"The first sign of a reversal will come if Nifty closes above 24,700. Until then, it’s a 'wait and watch' situation," said Rajesh Bhosale, Equity Technical Analyst at Angel Broking.
The broader market took an even harder hit, with the BSE Midcap plunging 2.5 percent, while the BSE Smallcap crashed by a staggering 3.5 percent. The India VIX, often referred to as the fear gauge, also spiked by over 4 percent to 14.3, reflecting heightened market volatility.
"Midcaps have seen sharp sell-offs in the last two sessions, and in such a scenario, it's better to adopt a cautious approach," Bhosale advised investors.
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Sectorally, Nifty Energy, Auto, Metal, PSU Bank, Realty, and Media indices slumped between 2-4 percent, posting the sharpest losses.
ICICI Bank stood as the sole gainer on the Nifty 50, while Adani Enterprises, Bharat Electronics, Coal India, M&M, and Tata Steel were among the biggest losers, tumbling 3-4 percent.
Hyundai India's shares fell almost 5 percent as it failed to cheer investors on its capital market debut.
Analysts will closely monitor key factors such as Q2FY25 domestic earnings, crude oil prices, the geopolitical landscape in the Middle East, and the upcoming US Presidential election campaign to gauge the market's direction.
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