HMPV scare triggers market crash? Investors' wealth plunges by Rs 10.98 lakh crore

Investors' wealth plunged by Rs 10.98 lakh crore on Monday as markets experienced a widespread selloff, driven by concerns over slow third-quarter earnings growth and a continued outflow of foreign funds.

Sunita Iyer

First Published Jan 6, 2025, 6:25 PM IST | Last Updated Jan 6, 2025, 6:25 PM IST

Indian equity markets witnessed a sharp decline on Monday, as concerns over third-quarter earnings growth and foreign fund outflows led to a broad-based selloff. The 30-share BSE benchmark Sensex tumbled 1,258.12 points, or 1.59%, closing at 77,964.99, while the NSE Nifty slumped by 388.70 points, or 1.62%, to 23,616.05. The market capitalization of BSE-listed firms dropped by Rs 10.98 lakh crore, settling at Rs 4,38,79,406.58 crore (USD 5.11 trillion).

Traders cited multiple factors contributing to the market's downfall. A significant concern was the emerging Human Metapneumovirus (HMPV) scare, which added to the already fragile investor sentiment. The new virus threat, coupled with worries over the third-quarter earnings growth, triggered fears of further economic slowdown.

Additionally, the rupee's continued depreciation against the US dollar added further strain. The Indian currency hit a fresh record low, weakening investor sentiment and fueling concerns about inflation and foreign capital outflows. These factors combined to heighten uncertainty, prompting a broad-based selloff in both large-cap and mid-cap stocks.

The 30-share blue-chip pack saw major laggards, including Tata Steel, NTPC, Kotak Mahindra Bank, Power Grid, Zomato, Adani Ports, IndusInd Bank, Asian Paints, ITC, and Reliance Industries. On the other hand, Titan, HCL Tech, and Sun Pharma were among the few gainers on the day.

"The Indian equity markets are facing sharp declines today, driven by rising FII selling and concerns about the upcoming Q3 earnings season. The added fears surrounding HMPV and the weakening rupee have only exacerbated the bearish sentiment," said Santosh Meena, Head of Research at Swastika Investmart.

Foreign Institutional Investors (FIIs) continued their selling spree, offloading equities worth Rs 4,227.25 crore on Friday, as per exchange data. This led to further pressure on the indices, with the BSE Smallcap index plummeting by 3.17% and the Midcap index falling by 2.44%.

"The intensified selling pressure on Indian equities is largely due to the outbreak of HMPV and the sharp fall in banking stocks following disappointing quarterly updates. A significant part of the weakness is also attributed to a negative global outlook," said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd.

All BSE sectoral indices ended in the red, with utilities taking the hardest hit, falling by 4.16%. Other sectors such as power, services, metal, oil & gas, energy, industrials, and commodities also saw declines, ranging from 2.74% to 3.73%.

With 3,474 stocks closing lower and just 656 advancing, market breadth remained highly negative. The ongoing concerns surrounding global economic uncertainties, compounded by the domestic challenges, have caused widespread pessimism among investors.

"Emerging markets, including India, are experiencing a consolidation phase, driven by uncertainty over US economic policies, the Fed’s hawkish stance, and a strong dollar. Additionally, concerns about the HMPV outbreak have contributed to the market's underperformance," said Vinod Nair, Head of Research at Geojit Financial Services.

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