Indian equities fell sharply on Monday amid weak global cues, fall in banking stocks and reports of the HMP virus outbreak.

The Nifty 50 slipped 1.6 per cent at 23,616, while the Sensex tumbled 1.59 per cent to 77,965. The Nifty Smallcap 100 index and the Nifty Midcap 100 index plunged by 3.2 per cent and 2.7 per cent, respectively. Declining shares outnumbered advancing shares, with advance decline ratio at 0.19 at BSE, lowest since October 22.

Nifty PSU Bank, Oil & Gas, Realty and Metals indices were the top losers. Banking stocks faced significant pressure post lacklustre quarterly updates, with the Nifty Bank index falling 2.1 per cent to 49,922, while the Nifty Financial Services index lost 1.76 per cent.

Vinod Nair, Head of Research, Geojit Financial Services, said emerging markets were undergoing consolidation due to uncertainties surrounding the new US economic policies, the Fed’s hawkish stance on future rate cuts, potential upward revision for CY25 inflation, and a strong dollar.

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“The primary catalyst for a sharp sell-off in the domestic market appears to be concerns over the HMPV. The initial Q3 consensus earnings estimate suggests a potential gradual recovery in domestic corporate earnings, which could explain the domestic market’s underperformance compared to global markets led by premium valuation,” said Nair.

The Indian rupee slipped to an all-time low of 85.82, pressured by persistent demand for US dollar. On the domestic macro front, India’s service PMI rose to a four-month high of 59.3 in December compared to 58.4 in the previous month.

“We expect markets to remain volatile until concerns relating to the new virus ease out. We could see stock/sector specific action on the back of pre-quarterly business updates and the start of the Q3 result season,” said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services.

FPIs sold shares worth ₹2,575 on Monday while domestic institutions bought shares worth ₹5,749 crore.

Asian stock markets traded mixed, with Japan’s Nikkei 225 and Indonesia’s Jakarta Composite the top losers.

“The short-term trend of Nifty is weak and one may expect some more weakness in the coming sessions. The next lower supports are seen in the vicinity of 23460 and 23260 levels. Any upside bounce could find hurdle around 23800,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.