It was a rough day on Dalal Street. Indian stock markets took a beating, with auto stocks getting particularly hammered. Fears about Tesla's potential entry, continued selling by foreign investors, and global worries combined to create a perfect storm, sending the Sensex and Nifty tumbling.
The Sensex, India's benchmark index, shed 424 points (0.6%) to close at 75,311. The broader Nifty 50 index dropped 117 points (0.5%) to finish at 22,795. It wasn't a pretty picture across the board, with more stocks falling than advancing. From their September 2024 peak, The Sensex dropped 12%, nifty lost 13%.
The reason a plenty
- Tesla's Shadow: News reports suggested the government might drastically cut import duties on electric vehicles, potentially from 110% down to a mere 15%. This move is seen as clearing the path for Tesla's entry into India, and it spooked investors in domestic auto companies.
- Foreign Investors Retreat: Foreign Institutional Investors (FIIs) have been pulling money out of Indian equities at a rapid pace. This month alone, they've offloaded a staggering Rs 33,527 crore worth of shares. It seems they're finding Chinese stocks more attractive right now.
- Global Headwinds: Worries about potential tariffs from the US if Trump wins, stubbornly high inflation in the US, and the Federal Reserve's cautious approach to interest rate cuts are all making investors nervous globally.
Auto Stocks Hit Hardest
The Nifty Auto index was the biggest loser, plunging 2.5%. The potential for increased competition from Tesla sent shares of Mahindra & Mahindra, Tata Motors, and TVS Motors sharply lower.
IT and Financials Also Stumble
Information technology and financial stocks weren't spared either. Both sectors fell by close to 1% due to ongoing pressure from foreign investor selling. Mid-sized IT firms like Coforge and Persistent Systems took a hit after a global peer, Endava, lowered its revenue growth forecast.
The pain wasn't limited to large-cap stocks. The BSE Midcap index fell by over 1%, and the BSE Smallcap index dipped 0.4%. This shows that investors are becoming more cautious about smaller companies, which are often seen as riskier.
Amidst the sea of red, there were a few winners:
- Nifty Metal Index: This was the only sectoral index to end in the green, rising over 1%.
- Individual Stocks: HCLTech, Eicher Motors, L&T, Tata Steel, and Hindalco managed to buck the trend, gaining 1-2%.
- JSW Energy: Shares jumped 6%, continuing a winning streak after Morgan Stanley reiterated its positive outlook on the stock.
- Religare Enterprises: The stock price shoot 18% after some structural changes.
- L&T Technology Services: The Stock surged 4% after getting a rating by a global brokerage firm.
The Losers: On the Nifty 50, Adani Ports, BPCL, Tata Motors, Wipro, and M&M were the biggest laggards, dropping 2-6 percent.
The Indian stock market is navigating a challenging period. With global uncertainties, foreign investor outflows, and specific sector-related concerns (like the potential impact of Tesla on domestic automakers), volatility is likely to continue.
DISCLIMER: Prameya or Prameya News7 does not endorse the views or recommendations expressed by experts/brokerages in this article. These are solely their opinions. Readers are advised to consult with a qualified financial advisor before making any investment or trading choices.
