Sensex, Nifty Fall Sharply – Nervousness Ahead of Budget 2024:

The Sensex, India’s benchmark stock market index, witnessed a sharp decline today, plunging 1.13% or 915.18 points to reach an intraday low of 79,435.76 levels. Concurrently, the Nifty50, another key index, fell 1.19% or 291 points, touching a low of 24,141.80 levels1.

Reasons Behind the Fall:

Profit Booking: Analysts attribute the sudden downturn to long-due profit booking. Investors had ample opportunities to capitalize on gains, leading to a correction in the markets. Stocks across the board, except for Maruti, were in negative territory. Mahindra & Mahindra (M&M) suffered the most, dropping over 7%, followed by HCLTech, Tata Steel, and Tata Motors, which declined between 1% to 3%1.

Valuation Concerns in Mid and Small-Caps:

The broader markets, including Nifty SmallCap and MidCap indices, also saw major declines. Historically, corrections in SmallCaps occur approximately every two years, but the recent bull run in small caps had surprised many investors. Some stocks were trading at exceedingly high PE multiples of 4200x, raising concerns about valuations, reported Business Standard.

Nervousness Ahead of Budget 2024: Anticipation surrounding the upcoming budget announcement may have contributed to the market downturn. Historically, markets tend to correct before and after budget announcements, adding to the observed volatility.

Bank Stocks Under Pressure: Banks were also under pressure, further impacting the overall market sentiment. HDFC Bank and Reliance Industries Limited (RIL) were major contributors to the market loss.

Individual Stock Impact:

M&M: The decision by M&M and Tata Motors to slash prices of some products did not sit well with investors. M&M stock slipped 7.31% in intraday deals, accounting for 79% of the overall fall in the Sensex index1.

Other Large-Cap Losers: HCLTech (down 3%), followed by TCS and Tata Steel (falling nearly 2% each)1.

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