Sensex today: Bears roar as Nifty, Sensex see biggest fall in over

MUMBAI: Benchmark equity indices had one of their worst days in 2021 as they plummeted nearly 2 per cent. The fall was the biggest for both the Nifty50 and BSE-Sensex since the early days of April as the risk appetite of investors dimmed sharply.

The Nifty50 index closed 1.9 per cent lower at 17,857.25 points as it broke below its 20-day moving average of around 18,000 points. The BSE-Sensex slumped 1.9 per cent to close the day at 59,984.7 points.

“Relentless selling by FIIs is a key reason for this correction in the market. Today, Morgan Stanley downgraded India to equal-weight due to outperformance by Indian markets in recent months. Inflation and slowdown in global growth momentum are other concerns amid expensive valuations,” said Santosh Meena, Head of Research, Swastika Investmart.

The canvas of the market was painted red across the board as all sectoral indices on the Nifty50 index closed in the red. The market breadth was extremely weak as three stocks fell on the National Stock Exchange for every one stock that rose.

The fear among market participants was palpable from the near 7 per cent spike in the fear gauge India VIX as investors rushed to buy put options of the index to hedge themselves against further corrections.

Derivative analysts said that the bearish position among foreign investors in the Nifty50 and Nifty Bank’s November futures also soured the mood of the market. The Nifty Bank index was the biggest drag as it fell 3.3 per cent in one of the biggest drawdowns of the year.

Experts also pointed to the rush of initial public offerings that are hitting the primary market including marquee ones from Nykaa, Paytm and PolicyBazaar. Nykaa and Paytm alone are raising close to Rs. 24,000 crore from the IPO market, which has led to concerns that it could dry up liquidity from the secondary market for the next few weeks.

Adding to the malaise at home was the weakness of the global market. Stocks in Asia and Europe were lower as investors were cautious ahead of a week of central bank monetary policy outcomes from around the world.

Globally, investors have already priced in a cumulative 500 basis points hike in interest rate by central banks of Group of 10 countries in 2022 suggesting that rapid surge in inflation is already tightening global financial conditions.

The risk appetite of investors has been weak over the past week as the index has fallen in six out of the past eight sessions after rising for seven consecutive days in early October. Investors’ notional wealth in the past eight sessions has declined by Rs. 14 lakh crore, of which they lost Rs. 4.75 lakh crore in today’s session alone.

Among specific stocks, shares of ITC fell nearly 6 per cent as investors were unimpressed by the company’s cigarettes and FMCG business performance. Motilal Oswal Financial Services said that tepid EBIT and volume growth in the cigarette business did not merit further rerating for the stock.

Shares of IRCTC jumped nearly 12 per…