Falling for the second consecutive session, Indian stock market benchmarks - the Sensex and the Nifty - declined 0.80 percent each in intraday trade on Thursday amid weak global cues, rising US dollar and bond yields.
Sensex opened at 78,206.21 against its previous close of 78,148.49 and dropped over 600 points, or 0.80 percent, to the intraday low of 77,542.92. Finally, the 30-share pack closed 528 points, or 0.68 percent, lower at 77,620.21.
The Nifty opened at 23,674.75 against its previous close of 23,688.95 and declined over 180 points, or 0.80 percent, to 23,503.05. The index closed with a loss of 162 points, or 0.69 percent, at 23,526.50.
The selloff was more intense in the midcaps and smallcap segments as the BSE Midcap and Smallcap indices declined up to 1 percent.
In the last two sessions, the benchmark indices have declined by nearly 1 percent. The overall market capitalisation of BSE-listed firms has dropped to nearly ₹436 lakh crore from nearly ₹442 lakh crore on January 7, making investors poorer by about ₹6 lakh crore in two days.
Barring Nifty FMCG, which rose nearly 1 percent, defying weak market sentiment, all sectoral indices lost on Thursday.
Nifty Realty lost nearly percent, followed by the Oil and Gas index which dropped almost 2 percent. IT, metal, and PSU Bank indices dropped over a percent each. The Nifty Bank and Financial Services fell nearly 1 percent.
Here are the five crucial factors, according to experts, that are driving the Indian stock market down. Let's take a look:
Q3 earnings in focus: Traders and investors are cautious ahead of the December quarter earnings. TCS will set the tone by reporting its Q3 scorecard on January 9. While most experts expect the Q3 numbers to be better than the last two quarters, a stellar show is unlikely.
Rising US bond yields, dollar: US benchmark 10-year bond yields and the dollar have been rising in light of strong US macro data and waning prospects of a significant rate cut by the US Fed this year. The US dollar is near its highest level in over a year, while the 10-year US treasury yield is near 4.67 percent, close to its highest level since April 2024.
Heavy selling by FPIs: This has been a major negative for emerging markets like India as elevated bond yields and a strong dollar trigger foreign capital outflow.
Till January 8, FPIs (foreign portfolio investors) have sold off Indian equities worth about ₹12,000 crore. This trend may continue due to uncertainty surrounding President-elect Donald Trump's trade policies and the US Federal Reserve's interest rate path.
Macro jitters: Concerns over Indian economic growth losing steam appear to weigh on investors' risk appetite. India's gross domestic product (GDP) is expected to grow by 6.4 percent in the financial year 2024-25. This marks a four-year low and a fall from its 8.2 percent growth in the financial year 2024-25.
Slowing growth has raised concerns about downgrades, further accelerating the fall in the Indian currency and the outflow of foreign capital.
Meanwhile, media reports suggested that the global financial services firm HSBC has downgraded Indian equities from 'neutral' to 'overweight' amid concerns over high valuations and slowing growth momentum.
Fed policy, Trump's tariff moves: The recent strong US macro data and expectations of a rise in inflation have raised concerns that the US Fed may not go for even two rate cuts this year.
Trump will take office on January 20. There is much speculation about his plans for tariffs and protectionist measures. Experts believe his policies may drive up inflation, which would be a severe blow to the central bank's efforts to keep price rises under control.
Shrikant Chouhan of Kotak Securities believes that the current market texture is weak but oversold. Thus, a strong possibility of a pullback rally from the current levels cannot be ruled out.
(By arrangement with livemint.com)
