HMPV scare triggers market rout; Nifty ends below 24,650

The headline equity benchmarks witnessed a sharp decline on Monday, with the Nifty plunging below the 23,650 mark after an early surge. The benchmark index, which had touched an intraday high of 24,089.95, succumbed to selling pressure across sectors, particularly in PSU banks, realty, and metals.

The sudden downturn in sentiment was attributed to the unexpected news of three Human Metapneumovirus (HMPV) cases being detected in India. The Union Health Ministry confirmed the cases, stating they were identified through routine surveillance as part of the Indian Council of Medical Research's ongoing efforts to monitor respiratory illnesses nationwide.

Investors, who were primarily focused on Q3 earnings and global developments related to the Trump presidency and geopolitical tensions, were rattled by the HMPV news. This unexpected development added to the market volatility and contributed to the significant losses.

The S&P BSE Sensex plunged 1,258.12 points or 1.59% to 77,964.99. The Nifty 50 index tumbled 388.70 points or 1.62% to 23,616.05.

Trent (down 4.23%), Reliance Industries (down 2.65%) and HDFC Bank (down 2.23%) were major drags.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 2.44% and the S&P BSE Small-Cap index slipped 3.17%.

The market breadth was weak. On the BSE, 656 shares rose and 3,474 shares fell. A total of 115 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, jumped 15.58% to 15.65.

The Indian rupee plunged to a fresh record low against the US dollar on Monday, reaching 85.8425. It opened at 85.77 and is currently trading at 85.71.

Economy:

The HSBC India Services PMI surged from 58.4 in November to 59.3 in December, marking the most robust expansion in four months.

Concurrently, the HSBC India Composite Output Index, which reflects combined manufacturing and services activity, also strengthened, climbing from 58.6 in November to 59.2 in December, signifying the strongest growth in four months.

Meanwhile, India's foreign exchange (forex) reserves declined by $4.112 billion to an eight-month low of $640.279 billion during the week ended December 27, according to the latest RBI data.

Numbers to Track:

The yield on India's 10-year benchmark federal paper rose 1.68% to 6.893 as compared with the previous close of 6.779.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 85.8275, compared with its close of 85.7950 during the previous trading session.

MCX Gold futures for the 5 February 2024 settlement fell 0.36% to Rs 77,041.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.30% to 108.60.

The United States 10-year bond yield added 0.54% to 4.620.

In the commodities market, Brent crude for the March 2025 settlement lost 16 cents or 0.21% to $76.35 a barrel.

Global Markets:

Most European markets traded higher on Monday as investors sought more clues about the direction of the global economy.

Asian equities ended mixed, despite China's services sector expanding in December at the fastest pace in seven months, driven by robust domestic demand. The Caixin services PMI surged to 52.2, exceeding both market expectations of 51.4 and the November reading of 51.5.

In South Korea, a court dismissed an appeal by lawyers of impeached President Yoon Suk Yeol against an arrest warrant, according to a local media report Sunday.

Investor sentiment remains mixed after a turbulent end to 2024. While anticipated monetary policy easing and the potential of artificial intelligence to drive growth remain supportive factors, the threat of escalating US-China trade tensions could derail any market rally. Investors are also closely monitoring Beijing for further stimulus measures.

US tech stocks staged a strong rebound on Friday, recovering from the losses seen in the final week of 2024. Investors had capitalized on the year-end rally, a period often characterized by positive market movements known as the Santa Rally.

On Friday, the Dow Jones Industrial Average rose 0.8% to 42,732.13, the S&P 500 gained 1.3% to 5,942.47, and the NASDAQ Composite surged 1.8% to 19,621.68.

This week will feature a shortened trading schedule as the New York Stock Exchange will be closed on Thursday to honor the passing of former President Jimmy Carter.

The minutes from the Federal Reserve's December 17-18 meeting, scheduled for release on Wednesday, will provide further insights into the Fed's interest rate outlook. Recent statements have indicated a more cautious approach to rate cuts this year due to persistent inflation and a resilient economy.

The US December jobs report is due on Friday.

Stocks in Spotlight:

Shares of diagnostics companies surged following reports of an HMPV (Human Metapneumovirus) outbreak in China and the detection of two cases in India.

Thyrocare Technologies, Aspira Pathlab & Diagnostics, Suraksha Diagnostic, Krsnaa Diagnostics, Metropolis Healthcare, Dr. Lal PathLabs and Vijaya Diagnostic Centre rose by between 1.5% to 11.45%.

Metropolis Healthcare shares climbed 2.38% after the company announced double-digit revenue growth for Q3FY25, despite it being a seasonally slow period for diagnostics.

Shares of ITC declined by 2.75% to close at Rs 442.50 on Monday, on account of the record date for the demerger of its hotel business. The demerger of ITC's hotel business became effective on January 1st. A special trading session was conducted today to determine the fair price of the newly independent ITC Hotels. The closing price of ITC shares was discovered at Rs 455, reflecting a 5.6% or Rs 27 decline from the previous day's closing price, following the special pre-open session.

Kotak Mahindra Bank slipped 3.26% after Milind Nagnur, chief operating officer (COO) and chief technology officer (CTO) of the bank, tendered his resignation from the services of the bank due to personal reasons.

HDFC Bank declined 2.23%. The company's average deposits stood at Rs 24,52,700 crore as of 31st December 2024, registering the growth of around 15.9% as compared with Rs 21,17,100 crore as of 31st December 2023.

Union Bank of India tumbled 7.54% after the public lender reported a 2.36% decline in domestic deposits to Rs 11,82,623 crore as of 31 December 2024 as against Rs 12,11,178 crore posted as of 30 September 2024.

Bank of Baroda tumbled 5.69%. The company said that its domestic deposits increased 9.23% to Rs 11,65,874 crore as on 31st December 2024 as compared with Rs 10,67,371 crore as on 31st December 2023.

Bank of India slipped 4.72%. The company informed that its domestic deposits increased 13.26% to Rs 6,78,626 crore as on December 2024 compared with Rs 5,99,137 crore posted in December 2023.

Marico declined 1.94% after the company said that the rising trend in input costs is expected to result in a higher-than-anticipated gross margin contraction on a year-on-year basis.

Page Industries shed 0.30%. The company informed that its board has approved the appointment of Karthik Yathindra as chief executive officer (CEO) of the company with effect from 1 April 2025.

Gensol Engineering fell 1.44%. The firm secured a contract from a public sector undertaking for the development of a solar PV project in Gujarat worth Rs 1061.97 crore.

Premier Explosives dropped 8.57% after the company informed that a fire accident occurred on 4 January 2025, at its factory located in Peddakandukur village, Yadadri Bhuvanagiri District, Telangana.

FSN E-Commerce Ventures (Nykaa) gained 2.30% after the firm stated that it has witnessed a strong performance with consolidated net revenue growth likely to be higher than mid-twenties in the third quarter of FY25.

Mehai Technology hit an upper circuit of 2% after the company announced that it has received an order worth Rs 84.57 crore from Leapfrog Engineering Services for a water transmission project in Bahrain, a Middle East country.

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