₹8 trillion investor wealth wiped out as covid fears resurface

The National Stock Exchange’s Nifty index fell 1.77% to close at 17,806.8, while the Sensex plunged 1.6% to 59,845.29. This is the sharpest daily drop in the Nifty since 16 September and 23 September for the Sensex.

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Shares of 47 of the 50 members of the Nifty index fell, with Adani Ports plunging 7% to ₹794 and group flagship Adani Enterprises plummeting 5.85% to ₹3,642. Tata Motors, Tata Steel and Hindalco were the other major losers, declining 4-5.7%.

US GDP growth for the September quarter was unexpectedly revised upward to an annualized 3.2% from a previously reported 2.9%, fanning fears of more aggressive rate hikes by the Fed. Covid spikes in China and other Asian markets also soured the sentiment.

FIIs sold a provisional ₹706.84 crore worth of stocks on Friday, while DIIs purchased a provisional ₹3,399 crore. This meant retail investors trading on the secondary market dumped shares across sectors, particularly in small-caps and mid-caps.

This was reflected by the Nifty Midcap 100, plunging 3.76% to 30,158 and the Nifty Smallcap 100, falling 4.72% to 91,82.55. New-age stocks bore the brunt of selling, with Nykaa hitting a fresh 52-week low of ₹139.35 before paring some losses.

With the psychological 18,000 level on Nifty and 60,000 on Sensex being breached, analysts advised caution on the expectation of further profit booking as the Indian markets are relatively costlier than other emerging market peers.

“Strong economic data in the US will keep the interest rate on the higher side and reduce inflows for our emerging markets,” said Shrikant Chouhan, research head (retail), Kotak Securities. “Also, the unusual covid surge in China will keep other Asian markets down, which is indirectly negative for those markets which are doing well as valuations will remain expensive for those countries. They will fail to attract value buying, rather may invite further profit taking.”

Rising investor concerns were underscored by fear gauge India VIX rising 6.4% to 16.16. A rise in VIX signals a heightening risk-off appetite. The rupee fell 10 paise to 82.86 to the dollar. The outlook remains clouded, with the support of 18,000 now becoming the resistance. A bounce, if one happens, would be sold into, analysts said.

“On the downside, we expect the Nifty to drift lower till 17,560, which is the 61.82% Fibonacci retracement level of the rise from 16,748 – 18,887.6, said Jatin Gedia, technical research analyst, Sharekhan by BNP Paribas. “In terms of levels, crucial support is placed at 17,730–17,700, and the immediate resistance stands at 17,930 – 18,000.” The Nifty has fallen 5.7% from its life high of 18,887.6 on 1 December through 17,806.