The Indian stock market faced a significant setback on Monday as the Sensex dropped over 800 points, triggering broad-based selling across various sectors. This sell-off resulted in a steep decline in investor wealth, with an estimated Rs 4.83 lakh crore being wiped off, bringing the total investor wealth down to Rs 424.84 lakh crore. This marked a sharp contrast from the previous session's valuation of Rs 429.67 lakh crore. The Sensex closed 844 points lower at 76,535, while the Nifty also fell by 165 points, dropping to 23,265. These losses reflected a weak investor sentiment in the Indian markets, largely driven by concerns about global economic factors.

The market witnessed significant losses in several prominent stocks, including Zomato, M&M, Tata Steel, Adani Ports, HDFC Bank, Kotak Mahindra Bank, and Asian Paints. These stocks saw declines of up to 2.80%, contributing heavily to the negative movement of the Sensex. However, a few stocks managed to buck the trend and emerged as gainers. IndusInd Bank, Axis Bank, HUL, TCS, Titan, and NTPC were among the select stocks that saw gains, with a rise of up to 3.14% in early trades.

In terms of market breadth, the situation remained grim. Out of the 3,602 stocks traded on the Bombay Stock Exchange (BSE), only 757 stocks managed to trade in the green, while a staggering 2,724 stocks traded in the red, reflecting widespread pessimism. Moreover, 121 stocks remained unchanged. The weak sentiment in the market also led to a significant number of stocks hitting their lower circuit limits, with around 245 stocks unable to trade beyond their lower circuit limit. In contrast, 122 stocks managed to hit their upper circuit limits, but this number was not enough to offset the negative market trend.

Despite the downward momentum, there were some noteworthy movements in the market. A total of 65 stocks reached their 52-week highs, showing that there were still some pockets of strength in the market. On the other hand, 324 stocks hit their 52-week lows, further underscoring the overall weakness in market conditions. These contrasting movements highlight the polarized nature of the market, where a few stocks bucked the trend, but the overall market sentiment remained negative.

The expert take on the market conditions suggested that the ongoing weakness could persist due to several factors. V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, commented on the challenging macroeconomic environment, stating that the market would continue to face headwinds. A key issue was the stronger-than-expected U.S. jobs data, which revealed the creation of 2.56 lakh jobs in December, surpassing the expectations of 1.65 lakh job additions. This development has reduced the expectations of rate cuts in 2025, with analysts now predicting only one rate cut. The reduction in rate cut expectations is largely due to the U.S. economy showing resilience, with unemployment falling to 4.1%. This unexpected good news for the U.S. economy, in turn, is proving to be bad news for global markets, including India. The markets had initially discounted the possibility of a rate cut in 2025, but this new economic data has raised concerns that the anticipated stimulus may not materialize, further dampening investor sentiment.

The BSE midcap index also faced significant pressure, dropping 739 points to 43,501, reflecting weakness in the broader market. The small-cap stocks fared even worse, with the BSE small-cap index crashing 831 points to 51,891. This decline in mid and small-cap stocks is indicative of the broader market correction and reflects the widespread selling that has impacted various segments of the market.

On the foreign institutional investor (FII) front, there was a notable selloff in the market. Foreign investors sold Rs 2,254.68 crore worth of equities on a net basis on Friday. In contrast, domestic institutional investors (DIIs) were active buyers, purchasing Rs 3,961.92 crore worth of shares, according to provisional data from the National Stock Exchange (NSE). This divergence in the actions of FIIs and DIIs points to contrasting sentiments in the market, with foreign investors becoming more cautious amid global uncertainties, while domestic investors continue to show interest in Indian equities.

In conclusion, Monday’s market crash was driven by a combination of global economic concerns, particularly the stronger-than-expected U.S. jobs data, and widespread selling in the Indian stock market. The decline in investor wealth, along with the significant drop in the Sensex and Nifty, has left the market in a vulnerable position. While some stocks showed resilience, the overall sentiment remains negative, and experts predict that the market may continue to face challenges in the near term. Investors will need to closely monitor both domestic and global economic developments to assess the future direction of the market.