Indian shares, including Nifty 50, slip into correction as rate woes adds to sour sentiment

A wide swathe of the Indian shares, including the benchmark Nifty 50, slipped into correction territory on Wednesday as waning hopes of a rate cut next month added to concerns over dull earnings and sustained foreign outflows.

The NSE Nifty 50 fell 1.36%, its biggest slide in nearly six weeks, to end at 23,559.05 points. That is 10.34% below the record high it hit on Sept. 27, confirming the 50-member index is in a technical correction.

The 30-member BSE Sensex ended down 1.25% at 77690.95, just shy of a correction. But the broader markets were not as fortunate.

The more domestically-focused small- and mid-caps lost 3% and 2.6%, respectively, on the day and also ended in correction territory.

“This sell-off could intensify further and it’s just a matter of time before we go bit deeper into correction,” said Saurabh Jain, assistant vice president of retail equities research at SMC Global Securities.

“Indian markets were priced to perfection, and a lackluster earnings season has added to nervousness among investors and failed to sustain the hype in terms of valuations.”

Britannia, foreign selling weigh on Indian shares

“The relentless foreign selling, rising domestic inflationary concerns and uncertainty over the implications of a (President-elect Donald) Trump regime in the U.S. for emerging markets” are also reasons for the grim outlook, Jain added.

India’s retail inflation spiked to a 14-month high in October, data showed on Tuesday, dashing hopes of an interest rate cut in December and adding to fears of a consumption slowdown.

All the 13 major sectors declined on the day.

But given the small- and mid-caps have outperformed the benchmarks since the start of 2023, aided by steady inflows from domestic retail and mutual fund investors, some analysts think the correction is not yet done.

“Segments in broader markets have not corrected enough, and valuation concerns remain, lending scope for near-term pressure,” said Pratik Oswal, chief of passive business at Motilal Oswal Asset Management Company.

Among individual stocks, online food delivery platform Swiggy bucked the market trend, surging about 17% in its market debut.

On the flip side, Hyundai Motor India fell 3.6% after reporting a drop in September-quarter profit on lower domestic sales and geopolitical concerns.