Final Trade: Sensex drops 1,258 points; Nifty ends at 23,616 as market fear spikes

Indian stock markets faced a sharp decline on Monday, January 6, 2025, with the Sensex plunging over 1,200 points to close at 78,361.23. The Nifty followed suit, dipping below the crucial 23,600 mark, falling by 229.90 points, or 0.96%.

Key triggers for the market drop

1. HMPV cases in India: Investors were rattled by the news of two confirmed cases of human metapneumovirus (HMPV) in Karnataka, which added uncertainty to market sentiment. This virus has been causing disruptions in China, further fuelling fears of a global health crisis.

2. Rising India VIX: The India VIX, a gauge of market volatility, spiked by 17%, indicating heightened investor anxiety amid a broad-based sell-off.

3. Foreign portfolio investor (FPI) outflows: The market was further pressured by FPI outflows, with net sales of Rs 4,285 crore in January, reflecting a cautious stance towards Indian equities.

4. Weak global cues: Asian markets saw broad declines, and fears about rising global bond yields and oil prices weighed on sentiment.

Sectoral impact and notable stocks
Mid and small-cap stocks were hit hardest, with indices shedding up to 2%. Heavyweights like Tata Steel, Kotak Mahindra Bank, and HDFC Bank also saw significant losses.

Looking ahead
Market analysts caution that ongoing concerns over global health threats and macroeconomic uncertainties may keep the market volatile in the near term. Investors are advised to keep a close watch on developments and adjust their strategies accordingly.