In what seemed like an unrelenting upward trajectory for the Indian stock market, the Sensex took a sharp nosedive, shedding a staggering 900 points, dropping below the significant 71,000 mark. This downturn follows an extraordinary run in December 2023, marking a sudden reversal after the market had crossed this historic threshold earlier in the month.
The BSE Sensex had surged past the 71,000 points landmark immediately following the announcement of the 2023 state assembly election results on December 3 and 4. Subsequently, the market displayed resilience, maintaining its position above the 71,000 mark.
However, on Wednesday, December 20, a stark turn of events unfolded as the Sensex witnessed a drastic decline, closing below 70,500 points at the market's close. Major stocks like TCS and Hindustan Unilever contributed significantly to this downturn.
Alongside the Sensex, the NSE Nifty also experienced a dip, slipping below the 21,200 mark. This retreat comes merely two weeks after both indices had reached historic highs, indicating a swift and unexpected market reversal.
The plunge in the stock market finds explanations in multiple sectors. Bank, metal, and auto stocks displayed consistent declines throughout the market session on Wednesday. Additionally, concerns about the surge in Covid-19 cases, fueled by the emergence of the JN.1 sub-variant detected in Kerala, have revived apprehensions akin to those witnessed during the March 2020 lockdown.
Foreign institutional investors (FIIs) played a pivotal role in this downturn, offloading Indian shares worth ₹601.52 crore during the last market session, contrasting sharply with the modest ₹294 crore purchased by Domestic Institutional Investors (DIIs).
Amidst this current downturn, projections from HDFC Securities remain optimistic, foreseeing an eight to ten percent upsurge in Nifty and Sensex during the early months of 2024. These predictions hint at a potential rebound, possibly propelling the market to attain new highs.
The sudden dip in the Sensex and Nifty serves as a reminder of the inherent volatility within financial markets. While the reasons behind this downturn are multifaceted, market analysts and investors maintain a cautious yet hopeful outlook, anticipating the potential for a robust resurgence in the near future.
