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The Indian stock market ended in red.

• The Indian stock market saw a sharp downturn, with the Sensex and Nifty indices falling significantly.
• The market cap dropped by Rs 9 lakh crore, reflecting the market's bearish sentiment.
• Only ICICI Bank and Bharti Airtel resisted the trend, while BHEL, Coal India, M&M, Tata Motors, Tata Steel, SBI, and Hindalco were the top losers.
• Despite the downturn, the RBI upholds India's GDP growth forecast of 7.2% for FY25, suggesting potential for recovery in the medium to long term.

The Indian stock market experienced a sharp downturn on Tuesday, October 22, 2024. The Sensex, a benchmark index of the Bombay Stock Exchange (BSE), plummeted by 930.55 points, or 1.15%, to close at 81,151.27. Concurrently, the Nifty, the National Stock Exchange's key index, fell by 309 points, or 1.25%, to end the day at 24,472.10. This steep decline was primarily attributed to weak global cues and heavy selling in several sectors, including Public Sector Undertakings (PSU) banks, metal, and realty.

The selling pressure was also evident in other sectors such as Auto, IT, Fin Services, Pharma, Fast-Moving Consumer Goods (FMCG), Media, Energy, Private Bank, Infrastructure, and Commodity. The market's downturn had a significant impact on the market capitalization of companies listed on the BSE. The market cap dropped by a staggering Rs 9 lakh crore, bringing the total to Rs 445 lakh crore. This decline in market cap reflects the extent of the market's bearish sentiment and the magnitude of the sell-off.

Among the major stocks in the Sensex pack, only ICICI Bank and Bharti Airtel managed to stay in the green, resisting the overall market trend. On the other hand, BHEL, Coal India, M&M, Tata Motors, Tata Steel, SBI, and Hindalco emerged as the top losers in the Nifty pack.

Impact on Midcap and Smallcap Indices

The Nifty Midcap 100 index and the Nifty Smallcap 100 index also closed in the red, slipping 2.61% and 3.92%, respectively. The Nifty Bank index fell 1.36% to close at 51,257.15. Market experts have noted that bearish sentiment continues to dominate the domestic market amid heightened volatility. Small and midcap stocks have taken the biggest hit, reflecting the market's risk-averse sentiment.

The Reserve Bank of India's (RBI) latest bulletin, however, upholds India's GDP growth forecast of 7.2% for FY25. This suggests that the Q2 slowdown is temporary, with festive season consumption expected to rebound and ease the pressure on earnings downgrades.

In terms of technical analysis, the Nifty has slipped decisively below the 20-week average, indicating weakness. Both price and momentum indicators suggest further weakness. Experts predict that the Nifty could drift towards 24,000, where there is a high concentration of open interest on the put side, implying support. On the upside, 24,900 - 25,000 is expected to act as a crucial resistance from a short-term perspective.

Historical Similarities and Future Outlook

The Bank Nifty, which had been holding on until recently, also broke down and witnessed sharp selling pressure. This weakness is expected to have a rub-off effect on banking stocks. On the downside, support is placed at 51,000, below which it could slip towards 50,200. On the upside, 51,800 - 51,900 is expected to act as an immediate hurdle zone.

This market downturn is reminiscent of similar historical events where global cues and sector-specific pressures have led to significant market corrections. For instance, in 2008, the global financial crisis triggered by the subprime mortgage crisis in the US led to a massive sell-off in the Indian stock market. Similarly, in 2020, the outbreak of the COVID-19 pandemic and the subsequent lockdowns led to a sharp fall in the Indian stock market.