 "Worsening woes: Investors lose Rs 9.2 trillion in broadbased selloff")
The market rout in India deepened on Monday, with key indices falling to their lowest levels since June 6 last year as foreign portfolio investors (FPIs) extended their selling streak amid concerns over an earnings growth slowdown. Global market volatility, fuelled by uncertain US policies and the potential impact of Chinese ChatGPT rival DeepSeek, further dampened investor sentiment.
The Sensex plunged 824 points, or 1.1 per cent, to close at 75,366, while the Nifty 50 dropped 263 points, or 1.1 per cent, to 22,829 — their lowest closing levels since June 6 last year. The Nifty 50 closed below the 23,000 mark for the first time since June 7.
Broader markets suffered steeper losses, with the Nifty Smallcap 100 index tumbling 4 per cent and the Nifty Midcap 100 shedding 3 per cent. The fear gauge, India VIX, surged 8.3 per cent to 18.13, reflecting heightened volatility.
The total market capitalisation of BSE-listed companies contracted by Rs 9.2 trillion to Rs 410 trillion.
Furthermore, technology stocks also took a hit in the US, with Nvidia and Oracle posting steep losses in early trade, as DeepSeek’s low-cost artificial intelligence model stoked fears of diminishing dominance for Western companies.
DeepSeek’s new AI assistant, unveiled last week, promises to operate on reduced-capability chips using less data at a fraction of the cost, potentially redefining investment requirements in the sector.
Buzz surrounding the Chinese startup’s product weighed on markets globally, including in Asia. The BSE IT index dropped 3.3 per cent on Monday.
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Indian equities have been under pressure for months now, driven by record FPI outflows, slowing earnings growth, and global uncertainty. Analysts suggest investors are awaiting key events such as the Union Budget on February 1 and the US Federal Reserve meeting on January 28–29.
“Broad-based selling across sectors has dragged the market lower amid tepid earnings and weak sentiment across the globe,” said Vinod Nair, head of research at Geojit Financial Services. “It is now further exacerbated because of the US’s continued trade-related confrontations, with the latest being with Colombia.” The White House claimed victory in a showdown with Colombia over accepting flights of deported migrants from the US on Sunday, hours after President Donald Trump threatened steep tariffs on imports and other sanctions on the longtime American partner.
“Volatility is likely to persist this week with key events such as the Fed meeting, monthly derivatives expiry, and the Union Budget ahead,” said Nair. ALSO READ: Monday blues for stock markets! Reasons why Sensex, Nifty are falling today
FPIs sold shares worth Rs 5,015 crore on Monday, pushing the January selloff past Rs 64,000 crore, making it the second-worst month for FPI outflows after October 2024, when Rs 92,000 crore exited Indian markets.
DIIs, however, stepped in to buy shares worth Rs 6,642 crore on Monday, providing some relief.
"So far, earnings have fallen short of expectations, exacerbating FPI selling. Domestic institutional investors (DIIs) are booking profits in small and midcap stocks given their expensive valuations,” said Sunil Subramaniam, a market expert. “DIIs are sitting on a a lot of cash and are likely to deploy it after clarity emerges in earnings guidance, the Budget, and RBI policy.”
Sectoral losses were sharpest in telecom, IT, utilities, power, consumer durables, oil and gas, and health care. Among Sensex constituents, HCL Technologies, Zomato, Tech Mahindra, Power Grid Corporation, and Infosys posted the biggest declines. On the upside, ICICI Bank gained 1.4 per cent on strong third-quarter earnings, while Hindustan Unilever, M&M, SBI, and L&T also advanced.
Market breadth remained overwhelmingly negative, with 3,522 stocks declining, 593 advancing, and 119 unchanged on the BSE.
The benchmark Nifty 50 has now corrected 13 per cent from its September 26 peak, while the Nifty Smallcap 100 and Nifty Midcap 100 indices are down 17 per cent and 15 per cent, respectively, from their highs.
Investors’ wealth has eroded by nearly Rs 68 trillion (close to $800 billion) from the market’s peak.