Drop by drop, indices in deep water

Mumbai: Indian equities stretched losses to the sixth straight session on Monday. Overseas investors accelerated sales of stocks and spirited buying support from domestic institutions failed to stem the slide. The sell-off in mid-cap and small-cap stocks was sharper on Monday as individual investors-among their biggest holders-grew nervous about prospects in the wake of the market's losing spree, the longest in a year.

The NSE Nifty fell 0.87% or 218.85 points to close at 24,795.75. The BSE Sensex declined 0.78% or 638.45 points to close at 81,050. Both indices have slid nearly 5.3% in the past six days. The last time the Sensex and Nifty fell for six days in a row was in October 2023.

DIIs Pump in ₹13,245 crore

The six-day losing streak has eroded India's market capitalisation by ₹40 lakh crore to ₹452 lakh crore.

Foreign portfolio investors (FPIs) dumped shares worth ₹8,293 crore on Monday, taking their total sales this month to ₹ 38,653 crore. "Post the China stimulus, foreign investors are pumping money into its markets since China is at attractive valuations compared to India," said Pankaj Pandey, head of retail research at ICICI Securities. "The market correction is also because of geopolitical tensions and rising crude oil prices."

On Monday, the Nifty Midcap 150 index declined over 2%, while the Smallcap 250 index ended 2.8% lower. Over six trading sessions, the midcap index has slipped 4.7% and the smallcap index has dropped 4.9%.

Of the 4,178 shares traded on the BSE, 568 advanced, while 3,493 declined.

Purchases by domestic institutions averted a sharper fall. On Monday, they pumped ₹13,245 crore into the market. These investors have bought shares worth ₹39,673 crore so far in October.

Unless benchmark Nifty pulls back above 25,200 levels, a rebound is less likely, said Pandey. The Volatility Index (VIX), the market's fear gauge, rose 6.7% to 15.08 on Monday, signalling that traders see near-term risks. The index has surged 26% amid the market slump.

Elsewhere in Asia, Taiwan rose 1.79%, and Indonesia advanced 0.11%. South Korea ended 1.58% higher. Hong Kong advanced 1.60%. Mainland China markets, which remained closed on account of National Day Golden Week, will reopen on Tuesday.

More Downside
Some analysts are recommending clients stick to the 'sell-on-rise' strategy.

"Nifty is at previous low of 24,750 levels and further downside to 24,400 levels cannot be ruled out," said Vaishali Parekh, vice president of technical research at Prabhudas Liladher. "If Nifty holds above 24,400 levels, then some rebound can be expected, otherwise it would be a clear reversal of trend."

ICICI Securities' Pandey said that while markets have not seen a correction of more than 5-6% this year, typically the markets correct 10-12% in one year. "Despite strong domestic macros, the global uncertainty and volatility indicates room for further downside," he said. "Whenever there is a broadbased correction, the mid- and small-caps witness a sharper decline."

Apart from the Nifty IT Index, all other indices closed lower on Monday.