The Indian stock market suffered a brutal blow on January 13, as both the Sensex and Nifty plunged deeper into the red. Broad-based selling across sectors intensified the downward spiral, leaving investors reeling. By the end of the session, over ₹12.39 lakh crore in market capitalization had been wiped out, highlighting the day’s dramatic downturn.

Small and Mid-Cap Indices Take a Beating

Mid-cap and small-cap stocks bore the brunt of the sell-off, dropping 4% and 4.1%, respectively. According to Aishvarya Dadheech, CIO and Founder of Fident Asset Management, this segment could continue to face challenges, although the broader indices like Nifty and Sensex may be inching toward oversold territory.

“The direction of the market heavily depends on the earnings season. If results fail to meet expectations, the negative sentiment could persist longer,” Dadheech noted.

Global Cues Compound Market Woes

Adding to the domestic market’s struggles, global cues were far from favorable. Stocks across the Asia-Pacific region opened lower, reflecting Wall Street’s disappointing close after a stronger-than-expected U.S. jobs report dampened hopes for Federal Reserve rate cuts. The dollar index surged to its highest point since 2022, placing additional pressure on the Indian rupee, which hit an all-time low of ₹86.18 against the dollar.

By the end of the session, the Sensex closed 1,025.04 points down at 76,353.87, while the Nifty tumbled 344.35 points to settle at 23,087.15. Market breadth was overwhelmingly negative, with 3,219 stocks declining and just 442 advancing.

Sectoral Indices Paint a Grim Picture

All sectoral indices ended the day in the red, underscoring the broad-based nature of the sell-off. The Nifty Realty index saw the steepest fall, plunging 6.5%, while the PSU Bank index dropped over 3%, marking its fourth consecutive losing session. Weak Q3 updates from several banks further dampened sentiment in this sector.

Metal stocks also came under significant pressure, with Tata Steel, JSW Steel, and Vedanta leading the declines. The Auto sector wasn’t spared either, as major players like Mahindra & Mahindra, Maruti Suzuki, and Tata Motors dragged the Nifty Auto index down by nearly 3%. Even FMCG and Bank indices recorded losses of over 1%.

Key Stock Movers: Zomato and PB Fintech Stumble

Among individual stocks, Zomato saw its shares plunge by more than 6%, marking a near 20% decline over the past three weeks. The slide followed a downgrade by global brokerage firm Jefferies, which shifted its stance on the stock to ‘hold,’ citing increased competition in the quick commerce space and an overheated valuation.

PB Fintech also faced significant losses, with its stock tumbling nearly 10%. Morgan Stanley downgraded the stock to ‘underweight,’ pointing to lower-than-expected profit margins and high valuations.

Crude Price Surge Hits Energy-Dependent Stocks

Crude-sensitive stocks like Asian Paints, Berger Paints, CEAT, and Apollo Tyres also struggled as Brent crude prices surged to a three-month high of over $81 per barrel. The price rally was fueled by expanded U.S. sanctions on Russian oil producers, which are expected to disrupt crude supplies to major importers, including India.

Outlook: Brace for More Volatility

Akshay Chinchalkar, Head of Research at Axis Securities, offered a sobering assessment. “Nifty’s continued weakness is evident. The range between 23,177 and 23,355 will remain crucial on the downside, while resistance lies at 23,600. The momentum indicators suggest we’re not yet oversold, so further weakness is possible in the near term,” he explained.

While some large-cap stocks like Axis Bank, IndusInd Bank, HUL, and TCS managed to eke out gains, the overall market picture remains grim. With global headwinds and domestic uncertainties piling up, investors are bracing for what could be an extended period of turbulence.

Stay tuned as the earnings season unfolds—it may hold the key to determining whether this storm will subside or intensify further.