Indian benchmark indices have entered the correction zone as the Nifty50 index and BSE Sensex have corrected by almost 10 per cent from their respective 52-week highs. An index or stock is said to be in a correction phase when it falls 10 percent from its 52-week high.

The NSE’s Nifty fell nearly 325 points on Wednesday, hitting a low of 23,559.20, just 10 points away from its correction level of 23,649. The index had touched its 52-week high of 26 277.35 in September 2024. Similarly, Sensex fell 9.7% from its 52-week high of 85,978.25. The BSE barometer fell another 1,015 points to 77,659.65 during the day.

IFI’s steady sales, India Inc’s weak second quarter numbers, China’s stimulus package, geopolitical concerns, weak economic data and falling Indian currency are denting sentiment, according to market participants. of the stock market as a whole. Despite positive SIP flows, there are no signs of recovery in Indian markets.

Nifty saw its first significant correction in terms of time and price since March 2023. This sell-off was triggered by China’s new stimulus package, which diverted FII flows from India to China, said Santosh Meena, Head of Research at Swastika Investmart. .

“Weaker than expected profits of Indian companies in the second quarter, particularly in the consumer sector, further intensified FII selling, leading to record outflows from Indian stocks over the last month and a half. Nifty is now trading near its 200-DMA and is heavily oversold, suggesting a potential temporary bottom around the 23,500 level,” he said.

Nomura India said Donald Trump’s election victory and the almost certain victory of the Reds had significantly changed its macroeconomic outlook. “We are now seeing a rebound in US inflation in 2025, fueled by widespread tariffs.

The correction reflects investors’ growing caution over high valuations and macroeconomic uncertainties, with Nifty and Sensex today falling to their respective five-month lows, said Vikram Kasat, head of advisory at Prabhudas Lilladher. This latest slowdown was intensified by sustained outflows of foreign investors, disappointing corporate profits and rising inflation, he said.

“Since late September, foreign investors have withdrawn around $14 billion from Indian stocks. Additionally, as today marks the end of Bank Nifty’s weekly derivatives contracts, traders are expected to unwind their positions, which could weigh on banking stocks,” he added.

The pain in the broader markets is severe, with some stocks entering a bearish grip. Ignoring the sharper correction in some specific stocks, the BSE Midcap Index is down more than 11 percent from its 52-week high, while the BSE Smallcap Index is also officially in the throes of declines .

This sharp correction wiped out notional wealth of up to Rs 50 lakh crore from investors’ kitty. The total market capitalization of all BSE-listed companies fell to 429.26 lakh crore on Wednesday, November 13, from Rs 479.10 lakh crore on September 27.

Bears dominate Dalal Street, with a pessimistic outlook driven by rising US bond yields amid inflationary concerns following Donald Trump’s 2024 election victory, said Prashanth Tapse, senior vice president (research) at Mehta Equities .

“Fears of Trump’s tariff plans, particularly on China, are weighing on emerging markets like India. Despite record inflows into mutual fund SIPs and falling oil prices, Nifty and Bank Nifty remain bearish “Traders are waiting for key US inflation data and Fed Chairman Powell’s speech,” he said.

From an emerging markets perspective, the rising dollar index and sharp rise in the US 10-year bond yield are causes for concern, said VK Vijayakumar, chief investment strategist at Geojit Financial Services. High US bond yields will further facilitate capital outflows from emerging markets to the US. This will continue to be an obstacle for India, he said.

“Investors need to be careful while investing in sectors like cement, metals and oil refining, which are facing slowing growth. Safety concerns sectors like banking, new age digital businesses , hospitality, pharmaceuticals and IT, where growth prospects are good,” Vijaykumar added.