Domestic equities closed with deep cuts on March 11 after registering sharp gains in the prior session. Shares of private lenders such as HDFC Bank, Axis Bank and ICICI Bank were the biggest drags on the market.
Both the benchmark indices – Sensex and Nifty 50 – started the session in the green but quickly slipped into the negative territory as a sharp sell-off dragged them lower.
At the opening bell, the Sensex started slightly higher at 78,238.91 against its previous close of 78,205.98. However, the index soon slipped into the red and extended its losses as the session progressed. At close, Sensex was at 76,863.71, down by 1,342.27 points, or 1.72 per cent. The Nifty 50, too, opened marginally lower at 24,231.85 against its previous close of 24,261.60 and later closed at 23,866.85, down 394.75 pointrs, or 1.63 per cent.
The fear gauge, India VIX, spiked 11.37 per cent to quote above 21 level, indicating high volatility in the near term.
In the broader markets, midcaps bled the most. Nifty Midcap 100 closed 1.25 per cent lower, while Nifty Smallcap 100 settled 0.36 per cent down. Nifty 500, which represents more than 92 per cent of the free-float market cap of all NSE-listed stocks, lost 1.35 per cent.
Banking, Auto Emerge As Major Drag
Barring pharma, oil & gas and healthcare, all sectoral indices closed deep in the red. Nifty Auto tumbled 3.15 per cent, Nifty Private Bank declined 2.41 per cent, Nifty Financial Services fell 2.32 per cent, and Nifty PSU Bank slipped 1.83 per cent. Nifty IT, Nifty FMCG, Nifty Realty and Nifty Chemical also fell between 1 per cent and 2 per cent.
Because banking and financial stocks carry a heavy weight in the benchmark indices, the fall in these stocks pulled the overall market lower.
On the other hand, Nifty Pharma managed to close 0.41 per cent higher, while Nifty Oil & Gas, and Nifty Healthcare closed marginally up in the green.
Why Stock Market Fell Today
Several factors contributed to the sudden decline in the market.
FPI Selling Weighs on Sentiment
Foreign portfolio investors (FPIs) continued their selling streak for the seventh consecutive session after the Iran war started. On March 11, FPIs sold equities worth Rs 5,500 crore, according to data from National Securities Depository (NSDL). So far in the month, FPIs have offloaded domestic equities worth Rs 39,417 crore.
Profit Booking After Recent Gains
Markets had seen broad-based buying in the previous session amid easing concerns around global risks after US President Donald Trump indicated that the war might be on the verge of end. Benchmark indices recovered from earlier losses, but the rebound also prompted some investors to lock in gains. The profit booking, largely driven by a sell-on-rise strategy, added fresh pressure on the indices.
Mixed Signals on Geopolitical Tensions
Uncertainty surrounding the West Asian situation also kept investors cautious. Trump’s earlier suggestion that the conflict could be nearing an end, and then later his warning to Iranian leaders against blocking the Strait of Hormuz, and saying the US would strike the country “twenty times harder” if global energy supplies were disrupted confused investors.
