Indian stock markets experienced a sharp selloff on November 21, erasing Tuesday’s modest gains. Benchmark indices ended the day significantly lower, with the Sensex plunging 423 points to close at 77,156 and the Nifty dropping 169 points to 23,350, marking a five-month low for the latter. The midcap and smallcap segments also bore the brunt, contributing to a steep decline in overall market sentiment.

The market capitalisation of all BSE-listed companies plummeted by Rs 6 lakh crore in a single session, falling to Rs 425 lakh crore from Rs 431 lakh crore in the previous trading day. Weak earnings, geopolitical tensions, heavy foreign outflows, and fresh allegations against the Adani Group were key factors driving the selloff.

Adani Group Crisis

The Adani Group faced a severe blow as US authorities indicted Gautam Adani and other senior executives in a multibillion-dollar bribery and fraud case. Allegations include promises of over $250 million in bribes to Indian government officials to secure solar energy contracts. Shares of Adani Enterprises and Adani Ports tanked 23% each, wiping out more than Rs 2 lakh crore from the group’s market valuation.

Weak Q2 Earnings Fuel Concerns

The July-September quarter earnings added to the market’s woes. A significant number of companies reported weaker-than-expected results, triggering fears about slowing corporate growth. This earnings disappointment has dampened investor confidence further, compounding the market’s downward trend.

Geopolitical Tensions Escalate

Global cues were far from supportive, as escalating geopolitical tensions weighed heavily on sentiment. Russian President Vladimir Putin’s revised nuclear doctrine, combined with the U.S. approval for Ukraine to deploy longer-range missiles, raised fresh concerns over the intensifying Russia-Ukraine conflict.

FPI Outflows Add to Pressure

Relentless selling by foreign portfolio investors (FPIs) has exacerbated the bearish trend. October saw FPIs pull out Rs 94,017 crore from Indian equities, and November has already recorded outflows of Rs 25,942 crore as of November 19, according to NSDL data.

Most sectors closed in the red, with the Energy, FMCG, Oil & Gas, and PSU Bank indices shedding 1-2%. However, a few stocks offered some respite. Power Grid emerged as the top Nifty gainer, continuing to attract buyers. Indian Hotels hit an all-time high as the company announced plans to double its revenue by 2030.

Suzlon advanced, hitting its upper circuit for the third consecutive session. NLC India surged 6% after announcing a Rs 3,720 crore investment plan. UPL gained 2% following Alpha Wave Global’s acquisition of a 12.5% stake in its subsidiary, Advanta Enterprises. Paytm climbed over 3% on positive remarks from brokerage firm Bernstein.

PSP Projects slumped 10% after Adani Enfra disclosed a 30% stake acquisition at Rs 642 per share. Sammaan Capital extended Tuesday’s gains, climbing 7% as Moody’s reaffirmed its rating.

Declines overwhelmingly outnumbered advances, with the advance-decline ratio standing at a dismal 1:3. This indicates broader market weakness, with the majority of stocks witnessing selling pressure.

Adding to the gloomy picture, the Indian Rupee hit a fresh record low, closing at 84.50 against the US Dollar, compared to its previous close of 84.41.

The combination of domestic challenges and adverse global developments has cast a shadow over market recovery in the near term. While some individual stocks continue to show resilience, overall investor sentiment remains cautious as markets grapple with high valuations, geopolitical uncertainties, and regulatory concerns surrounding marquee companies like Adani Group.

Story first published: Thursday, November 21, 2024, 15:59 [IST]