Stock Market Crash: Is It Really Because Of HMPV? Experts Decode

The stock market has faced turbulence recently, driven by global concerns over the Human Metapneumovirus (HMPV) and weak corporate earnings, especially in the banking sector.

On January 6, the Indian equities markets closed lower for the second straight session, with steep drops seen in both benchmark indices. The Sensex dropped 1,258.12 points, or 1.59 percent, to settle at 77,964.99, and the Nifty plummeted 388.70 points, or 1.62 percent, to conclude at 23,616.05.

As the Indian equity markets grapple with heightened volatility and global uncertainties, experts offer valuable insights to help investors navigate the rocky waters.

Markets Show Resilience Amid HMPV Concerns

Sanjay Kathuria, CFA and Founder of Profits First pointed out that the market reaction to HMPV concerns appears more speculative than substantive. “HMPV is not a new virus; it was identified over two decades ago. While global concerns have risen, Indian health authorities have assured that there is no significant rise in cases within the country,” he stated.

Despite the initial sharp dip in indices, the markets have started to bounce back, underscoring their resilience. Stocks in the healthcare sector, such as Apollo Hospitals and Fortis, saw gains, reflecting investor confidence in the sector’s ability to manage emerging health challenges effectively.

Despite recent volatility, Kathuria emphasized the markets' underlying strength. “The partial recovery shows the market’s strength, and there is no need for panic,” he remarked. With indices rebounding after the initial sell-off, investors are advised to stay informed and focus on long-term investments rather than reacting to short-term noise.

Persistent FII Selling and Volatility Impact Market 

Hardik Matalia, Derivative Analyst at Choice Broking, highlighted that Foreign Institutional Investors (FIIs) sold equities worth  Rs 2,575 crore on January 6, while Domestic Institutional Investors (DIIs) cushioned the impact by purchasing equities worth  Rs 5,749 crore. Despite this support, the Nifty index fell below the 23,700 mark, signaling caution.

Matalia advised traders to exercise caution, implement strict stop-loss measures, and avoid carrying long positions overnight to manage risk effectively. While global markets showed a positive trajectory, the continued selling by FIIs could raise concerns about sustaining market stability.

Bearish Signals Amid Technical Challenges

Mandar Bhojane, Research Analyst at Choice Broking, pointed to weak domestic cues, global uncertainties, and rising concerns surrounding the Human Metapneumovirus (HMPV) as key drivers of the sell-off. 

According to Bhojane, 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. If the index fails to hold above current levels, further corrections could lead to the next support levels at 23,270 and 23,000, he said.

Bhojane discussed the technical indicators and presented a mixed outlook for the market. The Relative Strength Index (RSI), currently at 40.7, is trending downward, indicating bearish momentum. “In contrast, the Stochastic RSI showed a bullish crossover, hinting at a potential short-term recovery. This divergence in indicators suggests caution, as the market lacks a clear directional bias," he cited.

Cautious Optimism Amid Challenges

Rajesh Cheruvu, MD and CIO at LGT Wealth India, acknowledged the complex landscape created by inflationary pressures, interest rate adjustments, and geopolitical risks. However, he emphasized that "underlying strength remains in key sectors, particularly in Indian equities and fixed income, where innovation and demand continue to provide resilience." 

Looking ahead, Cheruvu observed that as inflation shows signs of moderation and central banks adopt a more measured approach to interest rates, we could see a more favorable environment for equities, though market movements will likely remain erratic in the short term. He also pointed out that corporate earnings will be critical, and sectors poised for growth—such as renewable energy, gold, and jewelry—may offer attractive opportunities.

Earnings Season: A Potential Turning Point

Ajit Mishra, SVP of Research at Religare Broking, noted that market sentiment has been dampened by a few disappointing quarterly updates, particularly from the banking sector, ahead of the earnings season.

Additionally, concerns over rising HMPV virus cases in India and persistent foreign fund outflows are adding to the pressure. Mishra believes that "only strong earnings results can shift the market tone toward a sustained recovery; otherwise, the corrective trend is likely to persist, interspersed with occasional intermediate bounces."

Ajay Bagga, a Banking and Market Expert, pointed out that muted expectations for Q3 earnings, following a relatively weak Q2, set the stage for fewer downgrades this quarter. 

He observed that this could provide some strength to the markets, adding that "the overarching theme will remain the Trump 2.0 inauguration on January 20th and his administration’s follow-through on election planks, including mass deportation of illegal immigrants, tax relief, regulatory relaxation, and tariffs on trading partners."

What Lies Ahead?

The road ahead remains uncertain, with geopolitical risks, earnings season outcomes, and macroeconomic factors playing critical roles. As experts highlighted the volatility of the market is uncertain and maintaining a long-term perspective and focusing on sectors with strong fundamentals will be key to weathering the storm. 

Investors are encouraged to monitor price action closely near critical levels and remain agile in their approach. While the markets may recover gradually, a decisive breakout above 24,000 remains the cornerstone of any sustainable bullish trend.

Also Read: Stock Market Volatility: Is Bull Run Still On? Will Nifty, Sensex Zoom To New Heights In 2025? Experts Decode