Markets tank on HMPV fears, Q3 earnings concerns; Sensex drops 1,258 points

Indian equity markets suffered significant losses on Monday as fears surrounding the Human Metapneumovirus (HMPV) and concerns over third-quarter earnings triggered a broad-based selloff, pushing both benchmark indices below their 200-day moving averages.

The BSE Sensex plunged 1,258.12 points or 1.59 per cent to close at 77,964.99, while the Nifty 50 fell 388.70 points or 1.62 per cent to end at 23,616.05. The market breadth was heavily skewed towards decliners, with 3,474 stocks falling against 656 advances on the BSE.

The selling pressure was more pronounced in broader markets, with the Nifty Next 50 dropping 3.17 per cent and the Nifty Midcap Select declining 2.41 per cent. Banking stocks faced significant pressure, with the Nifty Bank index falling 2.09 per cent to 49,922.00, while the Nifty Financial Services index lost 1.76 per cent.

“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,” said Vinod Nair, Head of Research at Geojit Financial Services.

Among individual stocks, Tata Steel was the biggest loser, dropping 4.60 per cent, followed by Trent (-4.35 per cent), BPCL (-3.68 per cent), NTPC (-3.63 per cent), and Adani Enterprises (-3.61 per cent). The few gainers included Apollo Hospitals, which rose 1.94 per cent, Tata Consumer Products (+1.12 per cent), Titan (+0.72 per cent), HCL Tech (+0.10 per cent), and ICICI Bank (+0.08 per cent).

The banking sector’s performance was particularly affected by weak quarterly updates. “Soft Q3 loan growth updates from banks like Union Bank and HDFC heavily weighed on the banking sector. Banking sector credit growth slowed to 10.5 per cent as of December 13, 2024, from 14-16 per cent over the past two years,” noted Satish Chandra Aluri from Lemonn Markets Desk.

FIIs/FPIs reported a net outflow of ₹4,227.25 crore, while DIIs registered a net inflow of ₹820.60 crore. Clients saw a net outflow of ₹184.85 crore, NRIs recorded a net outflow of ₹1.38 crore, and proprietary traders contributed a net inflow of ₹232.45 crore.

“There are already concerns that the forthcoming third quarter earnings could be muted for several sectors due to weak government spending and subdued demand, which is pushing investors, especially the FIIs, to further slash their domestic equity bets,” explained Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

The market’s technical outlook has also weakened. “The Nifty faced strong selling pressure throughout the session, struggling to sustain above the immediate resistance level of 24,000. It closed below 23,700 and breached the 200-day Exponential Moving Average (EMA), signaling a bearish trend,” said Mandar Bhojane, Research Analyst at Choice Broking.

Adding to the market’s woes were global factors. “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,” Nair added.

The session saw 176 stocks hitting 52-week highs, while 113 touched their 52-week lows. Six stocks each hit the upper and lower circuits during the day’s trading.