Indian Stock Market Tumbles: Why Sensex and Nifty 50 Fell Over 1% Today?

The Indian stock market took a significant hit on Monday, November 4, with widespread selling that impacted major indices. Both the Sensex and Nifty 50 plummeted over 1%, while mid-cap and small-cap stocks experienced losses of up to 2%.

Key Indices Performance

• Sensex: The Sensex opened slightly lower at 79,713.14, down from its previous close of 79,724.12. However, it continued to slide, reaching 78,836.99, marking a drop of over 1%.
• Nifty 50: Nifty opened at 24,315.75, marginally lower than its previous close of 24,304.35, and further dipped to 24,017.10.
• Midcap and Smallcap Indices: Both indices on the BSE fell up to 2%, adding to the market’s losses.

Drop in Market Capitalisation

The market capitalization of companies listed on the BSE declined sharply. From ₹448 lakh crore in the previous session, it fell to nearly ₹442 lakh crore, effectively causing a loss of around ₹6 lakh crore in one trading day.

Sectoral Losses

Sector-wise, several indices saw substantial declines:

Nifty Oil & Gas, Media, Consumer Durables, and Realty: Dropped by 2-3%.

Nifty Bank, Auto, FMCG, Metal, FMCG, and PSU Bank: Each of these sectors fell by around 1%.

Factors Driving the Market Down

Experts identified a few primary reasons behind Monday’s steep fall:

1. Uncertainty Surrounding US Elections

Investor caution ahead of the US presidential election is causing global market jitters. With opinion polls predicting a tight race between Kamala Harris and Donald Trump, market volatility is anticipated in the short term.

“In the next couple of days, markets globally will be focused on the US presidential elections, and there can be near-term volatility in response to the election outcome. However, this is likely to be short-lived and economic fundamentals like US growth, inflation, and the Fed action will influence the market trend,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2. High Valuations

Even after recent market corrections, valuations remain elevated, which some experts consider uncomfortable. According to Trendlyne, the Nifty 50’s current price-to-earnings (PE) ratio stands at 22.7, which is above its two-year average PE of 22.2 and close to its one-year average PE of 22.7.