Sensex, Nifty fall sharply: Benchmark index Sensex plunged 1.13 per cent or 915.18 points, hitting an intraday low of 79,435.76 levels on Wednesday, July 10, 2024.
On the BSE benchmark, nearly all stocks except Maruti (which rose 1.25 per cent) were in negative territory. M&M suffered the most, dropping over 7 per cent, followed by HCLTech, Tata Steel, and Tata Motors, all declining between 1 per cent to 3 per cent.
Concurrently, the NSE Nifty50 fell 1.19 per cent or 291 points, reaching a low of 24,141.80 levels.
Meanwhile, the broader markets also saw major declines, with Nifty SmallCap and MidCap indices falling upo to 2.85 per cent and 2.36 per cent respectively.
Profit booking in large-caps; M&M in focus
The sudden downturn in the markets, according to analysts, was a long-due profit booking. Deepak Jasani, head of retail research at HDFC Securities noted that markets are seeing time-wise correction. “Profit booking was expected given the numerous opportunities where investors could have capitalised on gains,” he said.
Among individual stocks, M&M was the top contributor towards today’s fall in the Sensex and Nifty indices. M&M stock slipped 7.31 per cent in the intraday deals to hit a low of Rs 2,711.75 per share. It accounted for 79 per cent in the overall fall in the Sensex index.
According to analysts, the decision by M&M and Tata Motors to slash prices of some of their products has not gone down well with investors.
Other large-cap losers include HCLTech (down 3 per cent), followed by TCS and Tata Steel, falling nearly 2 per cent each.
Valuation concerns in mid, small-caps
Commenting on the broader market slump, G Chokkalingam, founder of Equinomics Research pointed out that historically, corrections in SmallCaps occur approximately every two years, but the current bull run in small caps had surprised many investors. Some stocks were trading at exceedingly high PE multiples of 4200x, raising concerns about valuations.
Today’s market drop, he suggested, was largely driven by profit booking as the returns from Small and Midcap segments had been remarkably high, compelling investors to secure profits.
Nervousness ahead of Budget 2024
Chokalingam also highlighted another factor possibly influencing the market downturn: anticipation surrounding the Budget announcement. Historically, markets have tended to correct before and after Budget announcements, adding to the volatility observed today.
Bank stocks under pressure
That apart, banks were also under pressure, which may have contributed to the fall. This comes after the Reserve Bank of India (RBI) raised an alarm over certain banks having ‘lakhs’ of accounts used for fraudulent transactions and evergreening of loans during an interaction with chief financial officers and auditors of banks and financial institutions on Tuesday.
“One area that has come into sharper focus in the last couple of years is the control and management of internal accounts. We found certain banks having lakhs of such accounts with apparently no valid reason,” RBI deputy governor Swaminathan J said in his address to the lenders.
First Published: Jul 10 2024 | 11:49 AM IST