Indian Stock Market Plunges: Key Takeaways and Market Analysis

The Indian stock market experienced a significant drop on May 9, with both the NIFTY 50 and BSE SENSEX hitting two-month lows. The NIFTY 50 closed at 21,957.50, down 345 points, while the SENSEX ended at 72,404.17, down 1062 points. This downward trend has persisted for five consecutive trading days, resulting in nearly a 3% loss for the NIFTY 50 and a 2% loss for the SENSEX.

The volatility in the domestic markets continued on May 9, with both benchmark indices closing at two-month lows. The NIFTY 50 and BSE SENSEX dropped more than 1% each. The SENSEX declined over 1000 points, while the NIFTY shed over 300 points at close. The NIFTY settled at 21,957.50, down 345 points or 1.55%, while the SENSEX ended at 72,404.17, down 1062 points or 1.45%.

Amid the weakness in the market, all sectoral indices closed in the red except for NIFTY Auto. The NIFTY Oil & Gas and Metal sectors were among the top losers.

Over the past five trading days, the NIFTY 50 has been on a downward trend, shedding almost 3% during this period. The BSE SENSEX, on the other hand, has extended its losses for the third straight day, eroding almost 2% during this period.

Among the NIFTY50 index, Hero MotoCorp (+3.1%), Tata Motors (+1.7%), and M&M (+1.5%) were the top gainers on this day, while L&T (-5.6%), BPCL (-4.5%), and Asian Paints (-4.4%) were the top losers.

The broader market indices also declined alongside their headline counterparts. The NIFTY Midcap 100 declined 927 points or 1.85% on Thursday. The NIFTY 500 dropped 360 points or 1.74%, while the NIFTY Smallcap settled 465.35 points or 2.83% lower.

The recent market crash has resulted in the erosion of investors' wealth by over ₹15 lakh crore. On May 7, around ₹5.5 lakh crore of investors' money was wiped out due to a broad sell-off. On May 9, investors lost around ₹2.2 lakh crore as the benchmark indices extended their losses.

The decline in the Indian benchmarks can be attributed to heavy sell-off by foreign institutional investors (FIIs). In May, the FIIs have been net sellers, withdrawing over ₹15,863 crore from the Indian market. They sold equities worth ₹35,692 crore in April 2024.

In addition to the sell-off by FIIs, domestic retail investors are also cautious due to mixed Q4 results. The uncertainty surrounding the Lok Sabha elections in 2024 is also contributing to the cautious market sentiment. Markets tend to witness a downward trend during election seasons, and the low voter turnout so far could affect the outcome in some constituencies.

Geopolitical tensions, including ongoing tensions in West Asia and the Russia-Ukraine war, are also weighing on global market sentiments, including the domestic markets.

Experts suggest that the markets could continue to remain choppy until the election results are announced. In the near term, there may be intraday pullbacks and pushbacks.

Overall, the Indian stock market has experienced a significant plunge, with both the NIFTY 50 and BSE SENSEX hitting two-month lows. The volatility in the market can be attributed to various factors such as heavy sell-off by FIIs, mixed Q4 results, uncertainty surrounding the Lok Sabha elections, and geopolitical tensions. Investors are advised to remain cautious and closely monitor the market developments.