(Photo : BT Creative)
Indian stock markets experienced a significant drop on Monday.

• The Indian stock market saw a significant downturn with the Sensex shedding 662 points on Friday.
• The market's decline was broad-based, with heavy selling seen in all sectors, except pharma and FMCG.
• This continuous fall in the domestic market is attributed to persistent selling by foreign institutional investors (FIIs).
• Despite the market's decline, domestic institutional investors (DIIs) have been strong buyers, absorbing the selling pressure.

The Indian stock market experienced a significant downturn on Friday, with the Sensex shedding 662 points, a substantial drop that sent ripples through the financial sector. This decline was not an isolated incident but rather a part of a broader trend that has been observed in recent times. The Sensex, which had fallen more than 800 points in the afternoon trade, managed to recover some of its losses by the end of the trading day, but the damage had been done.

The BSE Sensex, a barometer of the Indian stock market, closed at 79,402.29, down by 662.87 points or 0.83 per cent. This was a significant drop, and it was mirrored by similar declines in other key indices. The NSE's Nifty fell 218.60 points or 0.9 per cent to 24,180.80. The Nifty Bank closed at 50,787.45 after falling 743.70 points or 1.44 per cent.

The Market's Decline and Sectoral Impact

The market's decline was broad-based, with heavy selling seen in all sectors, except pharma and FMCG. This was a clear indication of the bearish sentiment that had taken hold of the market. IndusInd Bank, M&M, L&T, NTPC, Maruti, Bajaj Finance, and Tata Motors were the top losers in the Sensex pack, while ITC, Axis Bank, Hindustan Unilever Ltd, Sun Pharma, ICICI Bank, and Kotak Mahindra Bank were the top gainers.

Market experts have attributed this continuous fall in the domestic market to persistent selling by foreign institutional investors (FIIs). The sustained and unprecedented selling by the FIIs has touched Rs 98,085 crore this month (up to October 24). This is a significant figure and indicates the extent of the selling pressure that the market has been under.

Role of Domestic Institutional Investors

However, it's not all doom and gloom. Domestic institutional investors (DIIs) have been strong buyers, absorbing the selling pressure and helping to mitigate the fall in the market. This shows that while FIIs have been selling, DIIs have been stepping in to buy, providing some support to the market.

The market's performance on Friday was in stark contrast to its opening on the same day. The Indian stock market had opened flat on Friday, with buying seen in the auto, IT, financial services and PSU Bank sectors. The Sensex was trading at 80,139.30 after gaining 74.14 points or 0.09 per cent. At the same time, Nifty opened trading at 24,418.05 after climbing 18.65 points or 0.08 per cent.

Despite the market's initial positive opening, the selling pressure from FIIs proved to be too much, and the market ended the day with significant losses. This shows the volatility and unpredictability of the stock market, where fortunes can change in a matter of hours.

Looking at the historical context, the Indian stock market has seen similar downturns in the past. For instance, during the global financial crisis of 2008, the Sensex had shed over 2,000 points in a single day. However, the market had managed to recover from that downturn, showing its resilience.