Markets crash as RIL drags, Paytm plunges

Massive sell-off in equities and a strong greenback pulled the rupee down by 17 paise to 74.40 on Monday, whereas the yield on 10-year benchmark bond closed 1 bps higher at 6.351%.

Sensex crashed over 1,600 points in intra-day trade on Monday as continued weakness in Paytm shares and the proposed withdrawal of the Reliance-Saudi Aramco deal dented market sentiment. The rollback of the three farm laws also shattered confidence.

Sensex marked its biggest fall since April 12 this year and closed the session at 58,465.89 points. The broader Nifty closed 348.25 points lower at 17,416.55 points. With Monday’s fall, both indices have lost over 5% from their October highs. Monday’s sell-off also wiped out Rs 8.2 lakh crore of investor wealth. The combined market capitalisation of BSE-listed companies stood at Rs 260.99 lakh crore at the closing.

Shares of Reliance Industries, which enjoy the highest weight on benchmarks, plunged as much as 4.42% on Monday as the company called off a proposed deal to sell a 20% stake in its oil-to-chemicals unit to Saudi Aramco. RIL, the largest company by market capitalisation, contributed 318 points to the Sensex’ fall of 1,170.12 points.

Paytm, which raised Rs 18,300 crore from equity markets, fell further on Monday to take its cumulative loss to 36.73%. The stock had plummeted 27% on debut – the worst-ever listing day performance by any Indian company with an issue size of above Rs 1,000 crore. Paytm on Monday lost Rs 13,215 crore of market value and is now valued smaller than Zomato and FSN E-Commerce. Interestingly, 35 of the 48 companies that went public in 2021 have a market cap of less than Rs 13,000 crore.

Massive sell-off in equities and a strong greenback pulled the rupee down by 17 paise to 74.40 on Monday, whereas the yield on 10-year benchmark bond closed 1 bps higher at 6.351%.

Deepak Jasani, head of retail research, HDFC Securities, said, “Concerns over government taking a step back on its reform agenda on the farm laws front, negative news flow from Reliance and Paytm’s relentless fall spooked sentiments in a market where the other worries of inflation and interest rates are already taking a toll.”

On Monday, foreign portfolio investors (FPIs) sold shares worth $462 million against local investors’ buying of $276 million, provisional data on exchanges showed. After selling $2.27 billion worth of shares in October, FPIs have bought Indian equities to the tune of $2.5 billion in November, taking their year-to-date buying to $9.2 billion, Bloomberg data showed. On the other hand, domestic institutional investors (DIIs) remained net buyers in both October and November, having bought equities worth $2.52 billion.

Nifty50 currently trades at 20.95x of its one-year forward earnings, which is 14% premium to its five-year average, Bloomberg data showed. “Valuations concerns have resurfaced amongst FPIs even as the new age IPOs come under severe selling pressure,” Jasani added.

The market breadth remained very weak on Monday as more than three stocks declined on the BSE for every gains. Of the 3,568 stocks traded, there were 2,571 losers against 843 gainers whereas 154 stocks ended the trade without any change.