Key Highlights
- Sensex and Nifty Slump: Sensex fell over 1,100 points to 76,250, and Nifty50 slid 350 points to 23,047.
- US Jobs Data Shakes Confidence: Strong US jobs report dampens hopes for early Fed rate cuts, sparking a global market selloff.
- FPI Selling Intensifies: Foreign investors offload over ₹21,350 crore in Indian equities in January alone.
- Crude Oil Surge Worsens Sentiment: Rising crude oil prices amid geopolitical tensions further pressure Indian markets.
- Market Cap Loss: Total market capitalization of BSE-listed companies shrinks by ₹14.54 lakh crore to ₹416.08 lakh crore.
New Delhi: The Indian stock market faced a significant selloff on Monday, with blue-chip indices Sensex and Nifty registering steep declines. The Sensex plunged over 1,100 points, ending the day at 76,250, while the Nifty50 dropped 350 points, closing at 23,047. The market turmoil erased ₹14.54 lakh crore in market capitalization, leaving investors jittery.
US Jobs Data Triggers Global Shockwaves
The stronger-than-expected US jobs report released last Friday has rattled global markets. The report revealed that the US unemployment rate fell to 4.1% in December, accompanied by robust job creation. This has diminished hopes for multiple interest rate cuts by the Federal Reserve in 2025, with analysts now predicting only one rate cut.
The unexpected resilience in the US labor market has led to tighter global liquidity, disproportionately affecting emerging markets like India.
Expert View:
“Markets are facing multiple headwinds. The strong US jobs data has significantly reduced expectations for aggressive Fed rate cuts, which are crucial for liquidity in emerging markets,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Foreign Selling Intensifies
Foreign portfolio investors (FPIs) have continued their aggressive selling spree. In January alone, FPIs sold equities worth over ₹21,350 crore, following outflows of ₹16,982 crore in December. Rising US bond yields, stretched Indian stock valuations, and disappointing corporate earnings have compounded the outflows, increasing pressure on domestic indices.
Crude Oil Surge Fuels Concerns
Global crude oil prices hit a 15-week high due to new US sanctions on Russia, raising fears of disrupted supply chains. As a major oil importer, India remains highly sensitive to crude price volatility. The surge in oil prices not only heightens inflationary pressures but also strains fiscal health, further unnerving investors.
Broader Implications for Indian Markets
- Weakened Earnings Sentiment: Sluggish corporate earnings growth has further dampened market optimism, especially in key sectors like IT and banking.
- Bond Yield Pressures: The rise in US bond yields continues to attract global funds away from Indian equities, exacerbating FPI outflows.
- Geopolitical Uncertainty: Escalating geopolitical tensions, particularly involving Russia and the US, have added another layer of unpredictability to global markets.
What Lies Ahead?
Analysts suggest that the road ahead could remain bumpy for Indian markets as global macroeconomic uncertainties persist. However, domestic factors like Union Budget announcements and corporate earnings in key sectors may provide some relief if they exceed expectations.
Investor Takeaway:
With heightened volatility in the near term, investors are advised to adopt a cautious approach. Diversification and a focus on fundamentally strong stocks are key strategies to navigate this turbulent period.
