Market carnage: Nifty 50, Sensex close in red, midcaps, smallcaps suffer; investors lose over Rs 7 lakh crore

On Monday, February 12, the domestic equity market witnessed a downward trend, with major benchmarks such as the Nifty 50 and the Sensex closing with losses, primarily driven by banking and financial giants. This decline occurred amidst anticipation of key macroeconomic indicators and mixed signals from global markets. Today, India is set to release crucial data, including the consumer price index (CPI)-based inflation figures for January and the index of industrial production (IIP) data for December.

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While most major Asian markets remained closed for holidays, European markets displayed mixed sentiments during the trading hours when the Sensex closed. Investors worldwide were awaiting US inflation data scheduled for Tuesday, along with British inflation data and eurozone GDP figures on Wednesday.

The Nifty 50 closed 166 points, or 0.76 percent, lower at 21,616.05, while the Sensex fell 523 points, or 0.73 percent, to end at 71,072.49. Notably, shares of ICICI Bank, ITC, HDFC Bank, and SBI emerged as the top drags on the Sensex index.

In the mid and smallcap segments, the BSE Midcap index witnessed a significant plunge of 2.62 percent, while the Smallcap index nosedived 3.16 percent. The overall market capitalization of firms listed on the BSE dropped to nearly Rs 379 lakh crore from almost Rs 386.4 lakh crore in the previous session, resulting in investors collectively losing about Rs 7.4 lakh crore in a single session.

Amidst the bearish sentiment, only 16 stocks managed to end in the green in the Nifty 50 index, with shares of Dr. Reddy's Laboratories, Apollo Hospitals Enterprise, and Divi's Laboratories emerging as the top gainers. Conversely, shares of Coal India, Hero MotoCorp, and BPCL closed as the top laggards.

Across sectoral indices, barring Nifty IT, Healthcare, and Pharma, all other sectors ended with losses. The Nifty Media index witnessed the most significant decline of 4.46 percent, followed by the PSU Bank index with a loss of 4.43 percent. Other sectors such as Nifty Realty, Oil & Gas, and Metal also closed with substantial losses. Both the Nifty Bank and Private Bank indices fell by 1.65 percent and 1.66 percent, respectively.

Vinod Nair, Head of Research, Geojit Financial Services, told Live Mint, "An uptick in exchange margin requirements caused a decrease in positions, primarily in mid and small caps. Aside from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks. The premium valuation gap between mid to large caps has notched to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to moderated operating margins. It is going to be a challenge for the broad market to sustain the premium valuation. Large caps are predicted to excel amid consolidation."

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Meanwhile, Rupak De, Senior Technical Analyst, LKP Securities, told the publication, "Nifty declined further after a consolidation breakdown on the hourly chart, indicating an increase in pessimism. The daily chart shows the index forming a lower top, signalling diminishing bullish sentiment. The momentum indicator aligns with this bearish outlook, displaying a crossover. The Nifty might remain 'sell on rise' as long as it remains below 21,850. On the downside, support is situated at 21,500."

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