Market meltdown! FII exodus triggers nearly 950 points crash

The Indian equity benchmarks closed at their lowest level in over three months on Tuesday on the back of consistent selling of Indian equities by foreign institutional investors amid earnings from Indian companies falling short of expectations in the second quarter of current financial year, analysts said. The Sensex dropped as much as 1,000 points and Nifty 50 index dropped below its important psychological level of 24,500.

The Sensex ended 931 points lower at 80,220.72 and Nifty 50 index dropped 309 points to close at 24,472.10.

Earnings posted by companies in Nifty 50 index have so far been below estimates leading to correction in markets, analysts said. Moreover, FII selling has aggravated the fall in the markets, they added.

"Nifty has broken down the neckline of the Head & Shoulder pattern created in the reversal from an all-time high level, indicating weakness on a higher timeframe. The momentum indicators on the weekly are showing downside momentum to continue. Immediate support for Nifty is at the 24,400 level, if broken can touch 24,000 levels as well soon," said Praveen Dwarakanath, Vice President of Hedged.in.

FII selling

FIIs have so far this month sold shares worth Rs 82,845 crore making it one of the worst months for FII investment in the country, data from NSDL showed. The FII selling comes at a time when China announced a slew of stimulus measures to prop up its economy which had been going through a phase of slowdown.

In a boost the real estate market, China announced largest stimulus package since the start of pandemic.

China's central bank, the PBOC, has once again reduced its benchmark lending rates, slashing the one-year loan prime rate by 25 bps to 3.10% and the five-year LPR to 3.60%, both at historic lows. This marks the second rate cut since July, part of the country’s broader stimulus efforts to revive economic growth. The move has spurred investor optimism, with Chinese stocks sharply outperforming global markets in recent weeks.

Back home, selling pressure was broad-based as all the major sector gauges compiled by the National Stock Exchange ended lower dragged by Nifty PSU Bank index's 4 per cent fall. nifty Realty, Consumer Durables, Oil & Gas, Metal, Auto and Bank indices also dropped between 1.5-3.6 per cent.

Mid- and small-cap shares also ended lower as Nifty Midcap 100 index dropped 2.53 per cent and Nifty Smallcap 100 index tumbled nearly 4 per cent.

Hyundai Motor India shares made a weak stock market debut on Tuesday, October 22 as the stock opened for trading at Rs 1,931 on the BSE, marking a decline of 1.47 per cent from the Initial Public Offering ( IPO ) price of Rs 1,960. On the National Stock Exchange, Hyundai Motor India shares opened for trading at Rs 1,934, marking a decline of 1.32 per cent.

Selling pressure was so intense that 47 out of 50 shares in Nifty 50 index closed lower. Adani Enterprises was top Nifty loser, the stock fell 4 per cent fall. Bharat Electronics, Mahindra & Mahindra , Coal India, Tata Steel, State Bank of India, Hindalco, Tata Motors , IndusInd Bank, Bharat Petroleum, Maruti Suzuki and Power Grid also fell between 2.3-3.5 per cent.

On the flipside, ICICI Bank , Bharti Airtel and Infosys were among the notable gainers.

The overall market breadth was extremely negative as 3,450 shares ended lower on the BSE while only 519 managed to close higher.