HMPV concerns weighs on Indian markets as Sensex and Nifty decline by 1.6 per cent

Further adding to the negative sentiment, traders noted the emerging HMPV scare, a weakening rupee, and a sluggish trend in Asian markets, all contributing to the downward pressure on stocks.

Sunita Iyer

First Published Jan 6, 2025, 5:44 PM IST | Last Updated Jan 6, 2025, 5:44 PM IST

Benchmark equity indices Sensex and Nifty witnessed a sharp decline of 1.6% on Monday, driven by a broad-based selloff. Investor sentiment was dampened by concerns over slow third-quarter earnings growth and a continued outflow of foreign capital, reducing risk appetite.

Further adding to the negative sentiment, traders noted the emerging HMPV scare, a weakening rupee, and a sluggish trend in Asian markets, all contributing to the downward pressure on stocks.

The 30-share BSE benchmark Sensex plunged 1,258.12 points, or 1.59%, closing below the 78,000 mark at 77,964.99. The index had earlier dropped as much as 1,441.49 points, or 1.81%, to hit 77,781.62 during the day.

On the BSE, 3,474 stocks closed lower, 656 stocks advanced, and 114 remained unchanged. The NSE Nifty also dropped by 388.70 points, or 1.62%, to close at 23,616.05, continuing the downward trend for the second consecutive session.

"Emerging markets are undergoing consolidation due to uncertainties surrounding new US economic policies, the Fed's hawkish stance on future rate cuts, potential upward revision for CY25 inflation, and a strong dollar, all of which are negatively impacting market sentiment. The primary catalyst for a sharp sell-off in the domestic market appears to be concerns over the human metapneumovirus (HMPV). Additionally, the initial Q3 consensus earnings estimate suggests a potential gradual recovery in domestic corporate earnings, which could explain the domestic market's underperformance compared to global markets led by premium valuation," Vinod Nair, Head of Research, Geojit Financial Services, said.

Among the 30 blue-chip stocks, Tata Steel, NTPC, Kotak Mahindra Bank, IndusInd Bank, Power Grid, Zomato, Adani Ports, Asian Paints, Mahindra & Mahindra, and Reliance Industries were among the biggest decliners.

On the other hand, Titan and Sun Pharma were the only stocks to post gains.

"The Indian equity markets witnessed a sharp decline today, with both Nifty and Bank Nifty slipping below their 200-day moving averages (DMA). The sell-off can be attributed to a rise in Foreign Institutional Investor (FII) selling and concerns surrounding the upcoming Q3 earnings season. Additionally, fears related to the new HMPV have added to the bearish sentiment, triggering fresh rounds of selling after the recent counter-trend pullback rally," Santosh Meena, Head of Research, Swastika Investmart, said.

The BSE Smallcap index plunged by 3.17%, while the Midcap index saw a decline of 2.44%.

"Indian equities faced intense selling pressure amid concerns regarding the outbreak of HMP Virus (Human Metapneumovirus) and sharp fall in banking stocks post lacklustre quarterly updates. Diagnostic stocks were in focus as the first two cases of HMPV were detected in Bangalore. There was broad-based sell-off in the market with midcap and smallcap indices falling between 2-3 per cent each and all sectoral indices closing in the red," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

All BSE sectoral indices closed in the red, with utilities plunging 4.16%, followed by power (-3.73%), services (-3.45%), metal (-3.15%), oil & gas (-3.15%), energy (-3.03%), industrials (-2.97%), and commodities (-2.74%).

"In the capital goods sector, order inflows are anticipated to rise from 4QFY25 onwards. Defence sector order is also expected to ramp up based on recent approvals. We expect markets to remain volatile until concerns relating to the new virus ease out. We could see stock/sector-specific action on the back of pre-quarterly business updates and the start of the Q3 result season," Khemka said.

The Indian Council of Medical Research (ICMR) has identified two cases of Human Metapneumovirus (HMPV) in Karnataka through routine surveillance of respiratory viral pathogens, the Union Health Ministry announced on Monday.

Foreign Institutional Investors (FIIs) sold equities worth Rs 4,227.25 crore on Friday after a brief pause, according to exchange data.

In Asian markets, Seoul ended higher, while Tokyo, Shanghai, and Hong Kong closed lower.

European markets were trading mixed, and US markets finished in positive territory on Friday.

Global oil benchmark Brent crude declined by 0.25% to USD 76.32 per barrel.

The rupee fell 4 paise, closing at a fresh record low of 85.83 (provisional) against the US dollar on Monday.

Meanwhile, India's services sector growth reached a four-month high in December, driven by strong demand and easing inflationary pressures. The seasonally adjusted HSBC India Services Business Activity Index rose from 58.4 in November to 59.3 in December, marking the strongest expansion in four months.

In the previous session, the BSE benchmark plunged 720.60 points or 0.90%, closing at 79,223.11 on Friday, while the Nifty dropped 183.90 points or 0.76% to 24,004.75.

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