After the Indian government confirmed two cases of Human Metapneumovirus (HMPV) in Karnataka and one in Gujarat, amid tales of a virus outbreak wreaking havoc in China, stock market investors selected to remain cautious. As a result, the Sensex sank by more than 1,300 points, while the Nifty lost almost 1.7%.
The India VIX fear gauge index increased by 16% as a widespread sell-off occurred across mid and small-cap equities, as well as in numerous sectors. The Sensex plunged more than 1,300 points to a day low of 77,915.54, while the Nifty fell below 23,600.
Metals, PSU banks, real estate, oil and gas, and financials were among the hardest hit industries. Union Bank of India's shares sank 7%, while Bank of Baroda, HPCL, BPCL, Tata Steel, Adani Energy Solutions, and PNB were all down approximately 4-5%.
The Sensex was weighed down by heavyweights like as HDFC Bank, Reliance Industries (RIL), and Kotak Mahindra Bank.
What sparked the stock market meltdown today?
While investors were watching earnings announcements and predictions for the Q3 results season, which starts this week, as well as developments surrounding the Trump presidency and geopolitical challenges, the news concerning HMPV in India caught them off guard.
While confirming the detection of two HMPV cases in Karnataka, the Union Health Ministry stated that the cases were discovered during routine surveillance for several respiratory viral pathogens, as part of the ICMR's ongoing efforts to monitor respiratory disorders across India.
Both cases involve infants who had never traveled international before. While a 3-month-old female newborn was discharged from Baptist Hospital in Bengaluru after being treated with bronchopneumonia, an 8-month-old male infant who tested positive for HMPV on January 3, 2025, is now recovering.
"It is stressed that HMPV is already in circulation worldwide, including in India, and cases of respiratory diseases connected with HMPV have been reported in a number of countries. Furthermore, according to current data from the ICMR and the Integrated Disease Surveillance Programme (IDSP) network, there has been no exceptional increase in Influenza-Like Illness (ILI) or Severe Acute Respiratory Illness (SARI) cases in the country," the Health Ministry stated.
"ICMR will continue to monitor trends in HMPV circulation throughout the year." The World Health Organization (WHO) is already giving periodic updates on the situation in China to help guide ongoing activities. The recent preparation drill across the country demonstrated that India is well-equipped to deal with any potential spike in respiratory infections, and public health measures can be implemented quickly if necessary," according to the ministry.
According to NSDL data, FII outflows have already had an impact on the stock market, totaling around half a billion dollars in January.
"The market is likely to be influenced by negative factors affecting FII flows as well as good domestic variables that can strengthen the market. The global macroeconomic environment remains negative, with the dollar index at 109 and the 10-year US bond rate at 4.62%," Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes FIIs will continue to sell until yields fall and the dollar stabilizes.
