Weekly wrap 11 to 15 March: NIFTY, SENSEX end in red as broad sell-off dents investor sentiment

• The midcap and smallcap indices nosedived around 6% this week.
• Investors lost more than ₹13 lakh crore in a single day on March 13 due to heavy selling pressure.
• ITC’s largest public shareholder BAT pares its stake to 25.5% in the company.

We are back with a recap of the markets that saw a roller coaster ride in a week of deep corrections.

Stock markets were in deep correction mode this week due to increased regulatory glare and a spike in United States bond yields. While benchmark indices SENSEX and NIFTY remained under pressure on most trading days, midcap and smallcap shares bore the brunt. The midcap and smallcap indices nosedived around 6% this week due to increasing concerns over valuations.

Stock markets started this week on a low point. Benchmark NIFTY tanked below the 22,400 level while SENSEX trimmed more than 600 points mainly due to weak global trends. Banking majors SBI, HDFC Bank and ICICI Bank were hit as stronger-than-expected US jobs data heightened uncertainty over Federal rate cuts.

High interest rates have fueled US bond yields, which drive investors to withdraw funds from emerging markets like India.

While leading indices SENSEX and NIFTY recovered from losses on Tuesday on value-buying on HDFC Bank, RIL and IT shares, broader markets remained under selling pressure. The sell-off was triggered amid concerns raised by the market regulator, the Securities and Exchange Board of India (SEBI), on midcap and smallcap.

SEBI chief Madhabi Puri Buch’s comments during an interaction with journalists on Monday, March 11, warned that there was froth in the midcap and smallcap stocks as their valuations were off-charts. She also indicated that the regulator was aware of price manipulation in the SME segment and cautioned investors against valuations.

The concerns raised by the regulator did not go down well with investors and midcap and smallcap indices fell up to 2% on Tuesday.

Stock markets witnessed a free fall on Wednesday due to deep selling in midcap and smallcap shares. The midcap and smallcap indices dropped to a two-year low while investors lost more than ₹13 lakh crore in a single day due to heavy selling pressure.

Besides SEBI chief’s damning comments, the first deadline of March 15 for stress tests by mutual funds mandated by the industry association AMFI also made investors nervous. Benchmark SENSEX plunged more than 900 points to settle below the 73,000 level and NIFTY tanked 1.51% to settle below the 22,000 level for the first time this month.

After a blip on Thursday due to value buying and some recovery in small and midcap indices, stock markets dipped into the red on Friday to close the week snapping a four-week gaining streak.

Benchmark SENSEX plunged 453 points, or 0.62%, to end at 72,643, while NIFTY settled at 22,023, down 123 points, or 56%.

ITC’s largest public shareholder offloads 3.5% stake in company

Shares of hotels-to-cigarette conglomerate ITC faced volatility this week as its largest public shareholder British American Tobacco (BAT) sold its 3.5% stake in the company in a block deal of around ₹17,491 crore on March 13. While shares traded lower ahead of the deal, the stock soared up to 9% on the deal day. The stock ended the week 0.13% lower ₹419.1 apiece on NSE on Friday, March 15.

SBI faces Supreme Court heat

State Bank of India shares declined for a fifth consecutive day on Friday, extending the loss for the entire week amid the Supreme Court order to submit the electoral bonds data to the Election Commission. The largest public sector lender faced the music in the apex court after it requested time till June to collate the data. The PSU bank stock has dropped 7.13% in the last one week.

JM Financial, Vedanta shares hit after SEBI curbs

JM Financial and Vedanta shares plunged due to SEBI orders against the companies. JM Financial shares tanked nearly 8% on Monday as the market regulator banned the company from managing new debt issues. Mining major Vedanta Ltd dropped up to 8% on Wednesday as the Sebi directed the company to pay around ₹78 crore to UK-based Cairn Group for delayed dividend payments. The regulator also barred some board members including managing director and CEO Navin Agarwal, from the capital markets for up to two months.

What to look forward

Broad-based selling and a meltdown in mid and smallcap stocks kept the investors hooked this week amid volatility. Next week, the investors would keep a watch on the outcome of the upcoming US Federal meeting. The outcome of the bi-monthly review on rate cuts could affect sentiments across markets globally.