MUMBAI: India’s equity markets faced a notable downturn, with benchmark indices experiencing a decline of nearly 1.5 per cent.
The significant drop can be primarily attributed to extensive selling in frontline stocks, particularly Reliance Industries, ICICI Bank, and HDFC Bank. The backdrop of rising geopolitical tensions in the Middle East, coupled with weaknesses in Japanese markets, contributed to this grim scenario.
Additionally, profit-taking following an unprecedented rally in the markets and outflows of foreign investments further exacerbated the situation, highlighting the volatile nature of equity markets.
The BSE Sensex ended the trading day down by 1,272.07 points, or 1.49 per cent, closing at 84,299.78 points on Monday.
It reached an intraday low of 84,257.14 points, reflecting a decline of 1,314.71 points or 1.53 per cent at one point during trading.
China’s stimulus package
Similarly, the NSE Nifty fell by 368.10 points, or 1.41 per cent, ending the day at 25,810.85 points. This dip represented a significant shift from the preceding day’s performance when the BSE benchmark had reached new heights, settling at 85,571.85 points with an intra-day peak of 85,978.25 points.
Within the 30 firms that constitute the Sensex, major contributors to the decline included Reliance Industries and Axis Bank, each recording drops of over three per cent.
Other significant laggards consisted of ICICI Bank, Nestle, Tech Mahindra, and automobile giants like Maruti and Tata Motors. Conversely, some companies, such as JSW Steel, NTPC, Tata Steel, Titan, and Asian Paints, emerged as gainers, illustrating the disparity in performance among various sectors in the market.
Analysts attribute the steep decline in Indian markets to a combination of domestic and international factors.
Vinod Nair, Head of Research at Geojit Financial Services, remarked that global markets have become increasingly unstable due to escalating geopolitical risks in the Middle East, along with potential increases in yen interest rates, which could curtail cross-border equity investments.
In contrast, the Chinese market exhibited resilience, buoyed by the announcement of a large stimulus package and attractive valuations.
“The divergence underscores the relative vulnerability of Indian equities in the current global environment.”
Japanese shares nosedive
Asian markets mirrored this turmoil, with major indices such as Seoul and Tokyo registering considerable declines. Japan’s Nikkei 225 index suffered a staggering drop of nearly five per cent, signifying a substantial reaction to the prevailing economic conditions.
On the other hand, the Shanghai Composite index saw a remarkable surge of eight per cent following the introduction of fresh stimulus measures, illustrating the varied responses across different markets.
Further complicating the outlook for Indian markets, Foreign Institutional Investors (FIIs) significantly offloaded equities worth Rs 1,209.10 crore on the previous Friday.
Such actions reflect a cautious sentiment among global investors amid the prevailing uncertainties. While the decline in global oil prices, with Brent crude falling to $ 71.84 a barrel, could provide some relief to the Indian economy, the overall sentiment in the equity markets remains fraught with apprehension.
