Stock market meltdown: Sensex drops 1300 points, Nifty 50 falls below 23,600; five reasons for the selloff include the HMPV virus fear

Stock market crash: Due to widespread selling, the Sensex and Nifty 50 plunged more than 1% each. As the Nifty Midcap 100 and Nifty Smallcap 100 indices fell more than 27% each, selling pressure also shook wider markets.

The Indian stock market plummeted on Monday, with the benchmark indices, the Sensex and Nifty 50, dropping more than 1% each due to widespread selling as investors were alarmed by news of a fresh viral epidemic in China. The Nifty 50 fell below the 23,700 mark, while the Sensex fell more than 1,100 points.

Every sectoral index was in the negative, but the ones that fell the most were Nifty PSU Bank, Nifty Metals, Nifty Oil & Gas, Nifty Realty, and Nifty Media.As the Nifty Midcap 100 and Nifty Smallcap 100 indices fell more than 2% each, selling pressure also shook wider markets.

Among the Nifty 50 companies, Apollo Hospitals Enterprise, Tata Consumer Products, Titan Company, HCL Technologies, and TCS were index gainers, while Trent, Tata Steel, BPCL, Coal India, and NTPC were the biggest losers.

The following are the main causes of today's decline in the Indian stock market:

Asian Markets Are Weak

 
The US President-elect Donald Trump has pledged to significantly boost tariffs on imports from China and other nations, which might impede growth for a region that depends largely on trade. As a result, sentiment remained cautious and most Asian markets saw lower trading.
 

Hong Kong's Hang Seng fell 0.3%, and Japan's Nikkei 225 index fell 1.5%. The index of the Shanghai Composite fell 0.2%.

A virus outbreak

According to reports, a Human Metapneumovirus (HMPV) case was discovered in Bengaluru on Monday. HMPV is thought to be the cause of the recent increase in respiratory ailments in China. An eight-month-old Bengaluru infant tested positive for HMPV, a virus that is related to COVID-19 and can cause respiratory illness in persons of all ages, particularly in young children, the elderly, and those with compromised immune systems, according to press sources.

Heavyweights fall

The markets were pulled lower by a steep decline in index heavyweights including Tata Steel, Reliance Industries, HDFC Bank, Kotak Mahindra Bank, ITC, and Tata Motors, among others. The Nifty 50 benchmark fell below the 23,800 mark.

The US dollar
Equities varied, with drops in Japanese stocks offsetting gains from a thriving semiconductor industry, as a measure of Asian currencies fell to its lowest level versus the dollar in over two decades. On Monday, the dollar was trading close to a two-year high. Around 108.74 was the current value of the dollar index, which measures the strength of the US dollar relative to a basket of six other currencies. The value of the US dollar increased from 157.22 to 157.77 Japanese yen. The price of the euro increased from $1.0306 to $1.0316.

Technicals The selling pressure has increased as the Nifty 50 violated its main support levels.

The Nifty 50 is in a solid position as long as it remains above its 200 DMA, which is at 23,900.However, from an intermonth viewpoint, the direction of the Nifty will be determined by Donald Trump's actions following his inauguration as US President on January 20, 2025. Taking into account these developments, the Nifty's upside is probably going to be limited.

Technically, the terrain points to the 23,905–23,727 mark as the Nifty's main support. At the 23,000 mark, intermonth support was observed. The Nifty faces obstacles at 24,321/24,857/25,500 and 26,277, according to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.