3-days selloff in Indian equities erode over ₹4.90 lakh cr of investors’ wealth

On Friday, Sensex and Nifty 50 plummeted by over 1% each with an intraday low of 59,669.91 and 17,795.55 respectively.

However, Sensex closed at 59,900.37 slipping by 452.90 points or 0.75%, while Nifty 50 ended at 17,859.45 down by 132.70 points or 0.74%. In the broader market, midcap and smallcap indices plunged by nearly a percent. In terms of sectoral indices, IT stocks were worst hit down by nearly 2% each on BSE and NSE. Also, metal and banking stocks witnessed substantial downside to add to woes. around 1%. Bank Nifty shed nearly 420 points.

Amol Athawale, Deputy Vice President – Technical Research at Kotak Securities said, “Worries of global economic slowdown and higher interest rates prevailing going ahead triggered frenzied selling amongst the investors that saw Sensex end below the psychological level of 60000. Also, the market is not comfortable with the current valuations given several headwinds, and hence investors resorted to profit-taking in banking, IT, and metals stocks.”

As per BSE data, the listed companies’ market cap stood at over ₹279.75 lakh crore by end of January 6th. In Friday’s session, investors lost over ₹2.20 lakh crore in wealth compared to the previous day. On January 5th, the market cap of BSE-listed firms was at over ₹281.95 lakh crore.

This week, the market cap was highest on January 3rd of BSE listed firms to over ₹284.65 lakh crore before taking the downturn from January 4th. That being said, in last 3 trading sessions, the market cap has plunged by over ₹4,90,293.28 crore.

Sensex has tumbled by 1,394 points and Nifty 50 fell by over 373 points from January 4-6th. Markets were in the green from January 2nd to 3rd, however, FOMC minutes, expectations of Q3 earnings and consistent foreign funds outflow led to Sensex and Nifty 50 giving up their gains and entering the red zone.

Furthermore, FIIs have been net sellers the entire week. From January 2nd to 6th, FIIs have pulled out ₹7,813.44 crore from Indian equities. On Friday, FIIs outflow was highest in the current week to the tune of ₹2,902.46 crore followed by selloffs of ₹1,449.45 crore and ₹2,620.89 crore on January 5th and January 6th. From January 2-3rd, the outflow was at ₹840.64 crore.

On investors, Vinod Nair, Head of Research at Geojit Financial Services said, “Investor risk sentiment took a blow post the release of the FOMC meeting minutes, which indicated further rate hikes in 2023 to tame inflation. Upcoming key US jobs data is expected to be encouraging which would influence the next Fed’s policy. The market already remains sensitive to FIIs selling and IT stocks traded with deep cuts ahead of the release of corporate earnings next week as the growth is anticipated to be muted.”

IT-giant TCS will kick start the December 2022 quarterly season by announcing its financial results for the quarter on January 9th. Peers like Infosys and HCL Tech are also lined up to announce their Q3 on January 12th followed by Wipro on January 13. The largest banker in terms of market share and largest private banker, HDFC Bank will also be announcing its Q3 results on January 14. Others will follow suit going ahead.

As of January 6, 2023, Reliance Industries (RIL) is the largest company in terms of market share with a valuation of over ₹17.16 lakh crore followed by TCS and HDFC Bank on the second and third spot with a market cap of ₹11.75 lakh crore and ₹8.89 lakh crore respectively. Infosys and ICICI Bank are also in the top 5 biggies list with a market cap of ₹6.09 lakh crore and ₹6.07 lakh crore on BSE.

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