The stock market experienced a significant downturn today, with both the Sensex and Nifty indices witnessing sharp declines, leading to losses for investors.
The downturn was particularly pronounced for small- and mid-cap stocks, which saw their worst performance in over two years. This decline in market sentiment was exacerbated by concerns surrounding the results of a stress test conducted by the markets regulator on mutual funds. The stress test highlighted worries about excessive speculation in these stocks, further dampening investor confidence.
The Nifty50 index closed below the 22,000 mark for the first time this month, dropping by 1.5 percent, while the S&P BSE Sensex settled 1.23 percent lower. This marked the largest decline in nearly two months, reversing the record highs achieved on March 11.
Small and mid-cap stocks bore the brunt of the downturn, with declines of 5.28 percent and 4.40 percent, respectively. These segments have now retreated significantly from their highs reached on February 8, with losses amounting to 14.4 percent and 7.7 percent.
Amid concerns regarding excessive inflows into these segments, the Securities and Exchange Board of India (Sebi) has mandated mutual funds to conduct stress tests and disclose the results by Friday. This move has added to investor apprehensions.
The day witnessed declines in 12 out of 13 major sectors and 43 Nifty50 stocks. State-owned banks, energy, realty, and metals sectors were among the worst performers, with losses ranging between 4 percent and 6 percent.
However, amidst the widespread downturn, there were a few bright spots. ITC witnessed a rise of 4.5 percent, following British American Tobacco's sale of a stake worth approximately $2 billion in the company. This development alleviated concerns that had been weighing on its stock performance.
