After a volatile trading session today, the Indian stock market ended sharply lower. Both the Nifty 50 and the Sensex fell prey to an avalanche of global headwinds coupled with domestic factors that crushed investor sentiment after a somewhat stable beginning to the week.
Nifty 50 index closed 125.4 points or 0.51% down at 24,591.2. Similarly, the S&P BSE Sensex ended the day at 80,794.3, down by 579.5 points or 0.71%.
Markets here were weighed down by global cues.
Fears over rising geopolitical tensions were a big reason for the market’s drop today. News of escalating hostilities across Eastern Europe and thawing US-China trade relations raised global investor anxieties, sending a strong risk-off sentiment across the world. Most of the Asian markets were, on the whole, extremely lackluster, creating a black mark on the Indian equities market.
Some worrisome global economic data that came out earlier in the day didn’t do anything to ease the concern. The sudden weakness in manufacturing activity across major economies stoked fears over the pace of recovery beyond those borders and weighed down investor sentiment towards riskier EM assets such as equities and bold moves from the Reserve Bank of India.
Domestically, the electoral calculus for Republicans makes ANGENDA’s passage far from assured.
On the home front, the market struggled with several major headwinds. These inflation dynamics have convulsed bond markets and investors are nervously awaiting the next monetary policy decision from the Reserve Bank of India (RBI) later this week. Counterbalancing hopes for an emerging rate cut is the Fed’s hawkish tone on inflation and persistent concerns about the future performance of the economy, which have market players on alert. Interest-rate sensitive sectors like financials and auto had heavy selling pressure on day one of the sell-off.
A report that same day by a leading global financial news outlet claiming the investigation of several Adani Group firms by U.S. prosecutors caused heavy selling pressure and extreme declines in shares of Adani Group companies, exacerbating overall market sentiment.
Sectoral Performance Mixed, but Indicators Improving on Average
Sectoral performance on the NSE was mostly red, with notable drops led by the Nifty Financial Services and Nifty IT indices. These heavyweight sectors were where the brunt of the selling pressure was felt. The Nifty Bank index saw a significant plunge.
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Seven sectors were able to defy gravity. Among sectoral indexes, the Nifty Realty index enjoyed healthy gains, helped by positive news flow and strong buying interest in some stocks. Among sectoral indices, the Nifty Metal index finished the day in the green, likely lifted by trends in global commodity prices.
Wider Market Perception
The negative sentiment left a mark on the broader market, as both the Nifty Midcap 100 and the Nifty Smallcap 100 indices closed in the negative territory, albeit with their losses being comparatively limited with respect to the benchmark indices.
Rupee and FII Market Activity.
The Indian Rupee weakened a bit against the US Dollar today, which is as expected given the risk-off sentiment and capital outflows. Foreign Institutional Investors (FIIs) continued on their selling spree, adding to the market woes. Domestic Institutional Investors (DIIs) filled some of the void by maintaining their net-buying streak.
Agriculture Market Outlook
Market participants expect sustained volatility ahead in the next few days led by global cues, the imminent RBI monetary policy meeting, and more news flow on domestic corporate developments. Investors should expect to learn more as they go, taking a cautious approach as past performance does not guarantee future results and watching global developments and central bank signals as the Fed and others pave the way for future market direction.
This article is intended as a wide-ranging, easy-to-understand digest of the day’s market activity and should not be read as investment advice. Investors should understand that all investments involve risk and the possible loss of capital, and should carefully consider their investment objectives and review with their financial advisors before investing.
