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Sensex Today: Indian benchmark equity indices traded lower on Thursday; Key Points On Why Is Market Falling Today?
Bear Bites: Sensex, Nifty Trade With Deep Cuts
Indian benchmark equity indices traded lower on Thursday, following a decline in global markets. The downturn was primarily driven by losses in IT stocks, amid concerns over US President-elect Donald Trump’s policies and renewed uncertainty surrounding the US interest rate cut outlook.
At 2:20 pm, the BSE Sensex had dropped 1,208 points (1.51%) to 79,025, while the NSE Nifty shed 358 points to 23,916. Investors will be watching India GDP data due on Friday.
Among the Sensex stocks, Infosys, Tech Mahindra, M&M, HCL Tech, TCS, and Power Grid were the biggest losers, dropping up to 3%. On the other hand, only SBI, Adani Ports, and Tata Motors managed to trade in the green.
Key Factors Behind Today’s Market Decline:
IT and Auto Stocks Drag
IT and auto stocks were the primary drags on the Nifty, with sectoral indices declining 2.3% and 1.3%, respectively. Infosys shares dropped 3%, TCS fell 2.2%, Tech Mahindra was down 2.5%, and HCL Tech slipped by 2%, leading the losses in the IT sector.
In the auto sector, Mahindra & Mahindra (-3.2%) and Eicher Motors (-2%) were among the biggest losers.
The decline in IT stocks follows the release of US inflation data, which suggested a slower-than-expected pace of rate cuts. This has raised concerns about reduced client spending, a key driver for Indian IT firms with significant exposure to the US market.
Global Rate Concerns Impacting Sentiment
Krishna Rao, co-head of equity broking at JM Financial Services, stated, “We expect markets to remain volatile due to slower rate cuts amid higher growth in the US, and the likelihood of increased inflation following Trump’s presidential victory.” The potential delay in US rate cuts has heightened uncertainty for emerging markets, dampening investor sentiment.
A stronger US dollar has also reduced the appeal of emerging-market assets, and Asian equities are feeling the pressure from the dollar’s recent gains and mounting concerns about escalating trade tensions.
Cautious stance from institutions, FIIs may not turn aggressive buyers
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that large institutions are adopting a cautious approach amid global uncertainties. “While the end of continuous FII selling is a positive sign, FIIs are unlikely to turn aggressive buyers given the strong dollar and macroeconomic challenges in emerging markets,” he said. Vijayakumar added that institutions are likely to wait for more clarity on US President-elect Donald Trump’s policies and their impact on global trade.
Technical resistance for Nifty
Mandar Bhojane, Research Analyst at Choice Broking, noted that the Nifty 50 continues to trade within a narrow range of 24,000 to 24,350. Technical indicators, such as the RSI momentum signal, suggest a potential bullish crossover, hinting at upward movement. If the index remains above the 24,400 level, it could potentially move towards 24,800 or even 25,000. On the downside, immediate support levels are seen at 24,000 and 23,900.
Market Outlook
The ongoing market correction has brought valuations closer to reasonable levels, with the Nifty’s price-to-earnings ratio easing to an estimated 21x from the October peak of 25.8. Anirudh Garg of Invasset PMS recommended raising cash levels in portfolios, citing stretched valuations. “Indian markets may need a breather from current levels,” he said.
While the halt in FII selling provides some relief, experts expect volatility to persist in the near term as markets process global cues and policy changes.
