In just two days, equity investors faced a staggering loss of ₹13 lakh crore in market valuation as the BSE benchmark Sensex saw a sharp 2.27% drop. The benchmark index shed 1,805.2 points, with a 984.23-point decline on Wednesday, November 13, 2024, ending at 77,690.95.

Experts cited soaring retail inflation, which hit a 14-month high of 6.21% in October, persistent foreign fund outflows, and muted corporate earnings as the primary reasons behind the significant market correction. Retail inflation, fueled by rising food prices, has now exceeded the Reserve Bank of India's (RBI) upper tolerance limit, dampening expectations of any major rate cuts in the near term.

Over two days, the market capitalisation of companies listed on the BSE plummeted by ₹13,07,898.47 crore, bringing the total down to ₹4,29,46,189.52 crore (around $5.09 trillion).

"The sharp inflation rise and breach of the RBI’s tolerance limit have removed hopes of any major rate cuts by the central bank soon," analysts remarked, noting that the uncertainty created volatility in the markets. Prashanth Tapse, Senior VP (Research) at Mehta Equities Limited, pointed out that continued selling by Foreign Institutional Investors (FIIs), paired with rising U.S. bond yields and disappointing corporate results, prompted global investors to reallocate funds to more attractively valued markets like China.

Among the Sensex's 30 stocks, Tata Steel, Mahindra & Mahindra, Adani Ports, State Bank of India, JSW Steel, HDFC Bank, IndusInd Bank, Kotak Mahindra Bank, Reliance Industries, and Bajaj Finserv faced significant losses, while NTPC, Tata Motors, and Infosys ended in the green. Data from Tuesday, November 12, 2024, indicated that FIIs sold equities worth ₹3,024.31 crore. The BSE's small-cap and mid-cap indices also took a hit, declining by 3.08% and 2.56%, respectively.

Sector-wise, all indices closed lower, with the realty sector seeing the largest drop (3.23%), followed by industrials (2.95%), capital goods (2.72%), services (2.54%), metals (2.54%), and commodities (2.45%). In total, 3,299 stocks declined, 670 advanced, and 98 remained unchanged on the BSE.

"Nifty has now faced its first substantial correction in both time and price since March 2023. The recent sell-off was influenced by China's new stimulus package, which has redirected FII flows away from India to China," said Santosh Meena, Head of Research at Swastika Investmart Limited. "Additionally, weaker-than-expected Q2 earnings, especially in the consumption sector, have exacerbated FII outflows, creating a record exodus of funds from Indian equities over the last six weeks. Rising U.S. bond yields and a strengthening dollar index are adding further headwinds for emerging markets like India