The key stock market indices fell sharply on Thursday, with the S&P BSE Sensex shedding more than 1,100 points to erase gains from the previous session, as a continued rally in Adani Group stocks was outweighed by global uncertainties and weaknesses in various sectors.
The Sensex tumbled 1,190.34 points to close at 79,043.74, while the Nifty50 declined 360.75 points to close at 23,914.15. Volatility was high throughout the day and was more pronounced in IT, auto, and pharmaceuticals.
Several factors contributed to this market decline. Overnight data from the U.S. showed stronger-than-expected consumer spending in October, raising concerns about a slower trajectory for interest rate cuts. While traders are pricing in a 65% chance of a Federal Reserve rate cut next month, uncertainty remains about further easing in 2025, dampening global investor sentiment. The MSCI Asia-Pacific index, excluding Japan, saw a slight decline of 0.07%.
According to Mandar Bhojane, research analyst at Choice Broking, uncertainty is prevailing. He said, “Apprehensions over the rate-cut cycle in the US are having a direct effect on the IT and pharmaceutical sectors, as both are export-oriented.”.
According to Vinod Nair, Head of Research at Geojit Financial Services, after a strong start to the week, domestic markets took a breather while a sell-off in US markets was led by renewed uncertainties about interest rates and rising geopolitical tensions.
Reports of Russia resorting to cruise missile strikes against Ukrainian cities further dented sentiment. Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit, noted, “Sectoral weakness would continue in the near term particularly in key sectors such as IT with high overseas vulnerability.
The Indian rupee weakened 6 paise to 84.46 against the US dollar, a stronger greenback signals negative sentiments for emerging markets. Meanwhile, crude oil prices were in a volatile session as Brent crude traded at $72.79 per barrel amidst concerns over demand after a surprise increase in U.S. gasoline stocks ahead of Thanksgiving.
Domestic institutional investors, however, have bought ₹1,301 crore of equities in the market. “Sustained selling by foreign institutional investors is pressuring the market. The Nifty 50 now moves in a very tight range of 24,000-24,350, and immediate support is placed at 24,000 below which a selling pressure is expected,” Bhojane said. Global cues and domestic economic developments will be closely watched by investors for short-term direction in the market.
