Falling for the second consecutive session, Indian stock market benchmarks – the Sensex and the Nifty 50- declined 0.80 per cent each in intraday trade on Thursday, January 9, 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 per cent, to the intraday low of 77,542.92. Finally, the 30-share pack closed 528 points, or 0.68 per cent, lower at 77,620.21.
The Nifty 50 opened at 23,674.75 against its previous close of 23,688.95 and declined over 180 points, or 0.80 per cent, to 23,503.05. The index closed with a loss of 162 points, or 0.69 per cent, at 23,526.50.
The selloff was more intense in the mid and small-cap segments as the BSE Midcap and Smallcap indices declined up to 1 per cent.
In the last two sessions, the benchmark indices have declined by nearly 1 per cent. 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.
“The recent fall in the Indian stock market can be attributed to several interconnected factors. Some of them include the significant outflow of foreign capital from Indian markets, the emergence of the HMPV virus and the Indian rupee’s fall against the US dollar. Additionally, weakness in Asian markets has compounded the negative outlook for Indian equities overall,” said Atul Parakh, CEO of Bigul.
Sectoral indices today
Barring Nifty FMCG, which rose nearly 1 per cent, defying weak market sentiment, all sectoral indices lost on Thursday.
Nifty Realty lost nearly per cent, followed by the Oil and Gas index which dropped almost 2 per cent. IT, metal and PSU Bank indices dropped over a per cent each.
Nifty Bank and Financial Services fell nearly 1 per cent.
Why is the Indian stock market falling?
Here are the five crucial factors, according to experts, that are driving the Indian stock market down. Let’s take a look:
1. 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.
2. 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 per cent, close to its highest level since April 2024.
This has been a major negative for emerging markets like India as elevated bond yields and a strong dollar trigger foreign capital outflow.
3. Heavy selling by FPIs
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.
4. Macro jitters
Concerns over Indian economic growth losing steam appear to weigh investors’ risk appetite.
As Mint reported, India’s gross domestic product (GDP) is expected to grow by 6.4 per cent in the financial year 2024-25, according to the Ministry of Statistics & Programme Implementation’s (MoSPI) official release on Tuesday, January 7. This marks a four-year low and a fall from its 8.2 per cent 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.
5. Uncertainty surrounding Fed’s 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.
According to Reuters, the minutes from the US Federal Reserve’s last meeting revealed that policymakers expect inflation to keep slowing down this year. However, they also noted a growing risk that inflation could remain stubborn, partly due to concerns about Donald Trump’s policies.
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.
Technical outlook of Nifty 50
Shrikant Chouhan, the head of equity research at Kotak Securities, observed the index formed a bearish candle on the daily charts and a lower top formation on the intraday charts, indicating further weakness from the current levels.
Chouhan 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.
“For traders now, 23,650/78,000 will be the key level to watch; below this level, the market could continue its weak formation till 23,400-23,375/77,300-77,200. If the indices rise above 23,650/78,000, they could bounce back to 23,750-23,800/78,300-78,500. Short-term traders should remain cautious and be very selective, as there is a risk of getting trapped at lower levels,” said Chouhan.
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