The Indian stock market kicked off the trading week on a cautious note, as the key equity indices, Sensex and Nifty, witnessed a decline on Monday. Investors stayed on the sidelines ahead of the Q3 earnings season, contributing to the bearish sentiment. Global market trends also showed a muted performance, and consistent foreign fund outflows further exacerbated the situation.
By 9:50 AM, the BSE Sensex had plunged over 700 points, dropping to around 76,650. Meanwhile, the NSE Nifty50 fell more than 200 points, nearing a 1% decline, settling near the 23,200 mark. The Sensex witnessed minimal gains from stocks like IndusInd Bank, Axis Bank, TCS, Hindustan Unilever, NTPC, and Infosys. In contrast, stocks such as Zomato, Adani Ports, Tata Steel, HDFC Bank, and M&M emerged as major laggards in the session.
The broader market was similarly affected, with all major indices trading in the negative. The India VIX, a volatility index, spiked nearly 7% during morning hours, signaling increased investor uncertainty. Among the major losers, the Nifty Next 50 index fell by 1.79%, further contributing to the market’s downward trend.
Sector-wise, the Nifty Realty index led the declines, crashing 2.89% during the session. Other notable laggards included the Consumer Durables and Metal indices, which fell by 1.76% and 1.63%, respectively.
Adding to the woes of the stock market, the Indian rupee depreciated significantly. The domestic currency lost 23 paise against the US dollar, hitting a historic low of 86.27 during early trading. The weakening rupee was primarily attributed to a robust US dollar and volatile global factors. Forex traders also highlighted the impact of rising crude oil prices, foreign capital outflows, and a negative sentiment in domestic equity markets on the rupee’s decline.
In terms of macroeconomic data, Foreign Institutional Investors (FIIs) sold Indian equities worth Rs 2,254.68 crore on a net basis on Friday, which continued to weigh on market sentiment. Brent crude, the global oil benchmark, climbed 1.44% to reach $80.91 per barrel, adding further pressure on India’s financial markets. Meanwhile, crude oil prices soared 1.62% to $81.05 per barrel.
Commenting on the current market outlook, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out the persistent headwinds facing the market. He noted that robust job growth in the US, with 2.56 lakh new jobs created in December, had led to a shift in rate cut expectations for 2025. With unemployment in the US at a record low of 4.1%, the economy appeared to be in good shape, meaning that a stimulus might not be necessary. While this economic data was favorable for the US, it posed challenges for the markets, which had priced in multiple rate cuts in 2025.
In India, the rise in Brent crude prices to $81 per barrel is a cause for concern. However, the latest Industrial Production (IIP) data for November, which showed a growth of 5.2%, indicated that India’s economy was recovering from the slowdown experienced in Q2.
As the week progresses, all eyes will be on the Q3 earnings season, and whether the market can recover from the current pressures. The global macroeconomic backdrop, combined with domestic factors like oil prices and currency depreciation, will likely continue to dictate the market’s trajectory in the near term.