Nifty 50 flirts with correction territory amid market slide

Benchmark Nifty 50 threatened to end in correction territory on Wednesday amid a market slide as a spike in inflation dampened hopes of a rate cut next month, adding to concerns over dull earnings and sustained foreign outflows.

The NSE Nifty 50 fell 1.1 per cent to a session-low of 23,616.40 points, which is 10 per cent below the record high it hit on September 27. If it ends the day at that level, it will signal a technical correction.

The BSE Sensex was down 1 per cent at 77,906 as of 2:23 pm IST.

"This sell-off could intensify further and it's just a matter of time before we go bit deeper into correction," said Saurabh Jain, assistant vice president of research of retail equities at SMC Global Securities.

"Indian markets were priced to perfection and a lacklustre earnings season has added to nervousness among investors and failed to sustain the hype in terms of valuations."

"Add to that, the relentless foreign selling, rising domestic inflationary concerns and uncertainty over the implications of a Trump regime in the US for emerging markets, the picture looks grim," Jain said.

Meanwhile, data on Tuesday showed India's retail inflation spiked to a 14-month high in October, dashing hopes of an interest rate cut in December and adding to fears of a consumption slowdown.

All the 13 major sectors declined on the day. The broader, more domestically-focused small- and mid-caps lost 2.4 per cent and 2.1 per cent, respectively.

"Despite the 6 per cent drop in benchmarks in October, segments in broader markets have not corrected enough, and valuation concerns remain, lending scope for near-term pressure," said Pratik Oswal, chief of passive business at Motilal Oswal Asset Management Company.

Since the start of 2023, the Nifty 50 has gained 30 per cent while small- and mid-caps have outperformed, rising about 80 per cent and 70 per cent, respectively, aided by steady inflows from domestic retail and mutual fund investors.