Market Wrap, January 6: Bears roar loud and clear; SENSEX, NIFTY50 sink 1.6%; top factors behind crash today

Investors dumped stocks left, right, and centre as sentiment took a major hit after the Indian Council of Medical Research detected two cases of human metapneumovirus (HMPV) in Karnataka through routine surveillance for multiple respiratory viral pathogens.

It is important to note that neither of the patients has any history of international travel, the Union Health Ministry underlined.

It emphasised that HMPV is already in circulation globally, including in India, and cases of respiratory illnesses associated with it have been reported in various countries.

However, this did not prevent the market from falling sharply.

Besides, weak global cues, too, played the spoilsport.

At close, the S&P BSE SENSEX stood at 77,964.99, down 1,258.12 points, or 1.59%, while the NSE's NIFTY50 index ended at 23,616.05, down 388.70 points, or 1.62%.

In the broader market, the BSE MidCap index ended at 45,793.07, down 1,143.01 points, or 2.44%, while the BSE SmallCap index settled at 54,337.37, down 1,778.84 points, or 3.17%.

Investor wealth dropped by ₹10.98 lakh crore as the market capitalisation of the BSE-listed companies fell from ₹449.78 lakh crore to ₹438.79 lakh crore.

HMPV virus scare

The first case of the HMPV virus in Bengaluru scared D-Street investors as, according to reports, HMPV is spreading fast in China. The news development sent jitters across the investing community as the deadly pandemic COVID-19 was also first reported in Wuhan, China, in 2019.

The world is yet to fully recover from the trauma of the COVID-19 pandemic, and hence, the outbreak of the HMPV virus unnerved investors.

India VIX, the fear gauge or the volatility index, jumped 15.58% to 15.65 levels.

The volatility index is a measure of the market’s expectation of volatility over the near term. Volatility is often described as the “rate and magnitude of changes in prices" and in finance is often referred to as risk.

"Volatility Index is a measure of the amount by which an underlying index is expected to fluctuate in the near term (calculated as annualised volatility, denoted in percentage, e.g., 20%) based on the order book of the underlying index options," explains NSE.

Heavyweights fall

ITC shares ended 2.75% lower at ₹442.50 apiece on the BSE after the company conducted a one-hour special session for the price discovery of ITC Hotels.

Today, ITC held a pre-open session for price discovery for ITC Hotels between 9:00 AM and 9:45 AM. The normal trading began at 10:00 AM.

The difference between ITC's closing price on January 3, 2025, and the opening price discovered during the Special Pre-Open Session (SPOS) was said to determine the demerged entity's stock price.

After the one-hour special session, ITC's discovered price stood at ₹455.60 per share. Shares of ITC ended at ₹481.6 apiece on the NSE on Friday. This implies a difference of ₹26.

The monthly business updates for December indicate that the bank’s credit growth during the period slowed down drastically as the bank focused on lowering the LDR (loan-deposit ratio). The gross advances for the bank stood at ₹25.4 lakh crore, higher by 3% YoY and 0.9% QoQ, as compared to the deposits at ₹25.6 lakh crore, which grew by 2.5% QoQ and 15.8% YoY.

FII selling

The continuous selling by overseas investors was one of the major factors behind the market crash.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,227.25 crore on Friday, according to exchange data.

In December, the foreign investors sold Indian equities worth ₹16,982.48 crore. In November, they sold shares worth ₹45,974.12 crore.

Heavy selling in PSU banks

Although selling was witnessed across the board, PSU banks took a heavy beating. The NIFTY PSU Bank index tumbled 4% to 6,354.15 levels.

All the 12 components ended in the red.

Among individual names, Union Bank of India ended 7.54% lower at ₹114.70 after the public lender reported a 2.36% decline in domestic deposits to ₹11,82,623 crore as of December 31, 2024, as against ₹12,11,178 crore posted as of September 30, 2024.

On a YoY basis, the domestic deposits rose 2.45% from ₹11,54,325 crore as of December 31, 2023.

Domestic CASA deposits were at ₹3,95,364 crore during the quarter, registering de-growth of 0.44% year-on-year (YoY) and 0.23% quarter-on-quarter (QoQ).

Global Stocks

In China, the yuan hit a 16-month low and blue-chip stocks traded at their weakest since late September, prompting the country's stock exchanges and central bank to defend its falling markets and soothe investor concern about the impact on the world's second biggest economy of Donald Trump's imminent return to the White House.