Market Dip: Sensex and Nifty Fall as Global Sentiment Turns Sour

Indian stock markets opened lower on Thursday, mirroring a decline in global investor sentiment. The BSE Sensex dropped 812 points, or 1%, to 80,784, while the Nifty50 fell 269 points, or 1.08%, to 24,544 around 9:33 am. This downward trend was largely driven by concerns about the US fiscal outlook and rising Treasury yields.

Global Factors Fueling the Sell-Off

Investor anxiety stems from Moody’s recent downgrade of the United States’ credit rating, coupled with worries over the country’s growing debt. These concerns were amplified by a weak US 20-year bond auction and a surge in yields on various US government bonds.

Higher US Treasury yields often make bonds more attractive to foreign investors, leading to capital outflows from emerging markets like India. This shift in investment sentiment has spilled over into Asian markets, with most indices experiencing losses in early trade.

Banking and IT Sectors Take a Hit

Within the Indian market, banking and IT stocks were among the hardest hit. IndusInd Bank shares tumbled 5.9% in early trade after reporting a consolidated net loss of Rs 2,329 crore in Q4 FY25, largely attributed to its derivatives segment. However, the stock later recovered some ground.

Several other Sensex companies, including Tech Mahindra, Power Grid, HCL Tech, IndusInd Bank, Nestle, and M&M, also saw significant declines. Only Adani Ports and Tata Steel opened with gains.

Sectoral Performance and Broader Market Trends

Sectoral indices like Nifty Bank, Auto, FMCG, IT, Pharma, Consumer Durables, and Oil & Gas all experienced declines ranging from 0.5% to 1.5%. The broader market also saw a negative trend, with the Nifty Midcap slipping 0.35% and the Nifty Smallcap edging up a modest 0.1%.

Expert Commentary

“There is a slight risk-off in global markets. This is evident from the strength in alternative assets like gold and Bitcoin. The fundamental issue is the high fiscal deficit of the US, which the market feels is unsustainable. The weak US 20-year bond auction and the spike in yields of 5-year, 10-year and 30-year bonds indicate the declining confidence in US bonds. In Japan, too, bond yields are rising,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

“Rising US bond yields are usually negative for emerging markets. But the situation is slightly different now. The root cause of the problem is the unsustainable US fiscal deficit and debt. This may trigger some capital flows away from the US to other economies where prospects for growth and earnings are better,” Vijayakumar added.

Looking Ahead

Mandar Bhojane, Equity Research Analyst at Choice Broking, anticipates that Nifty may find immediate support at 24,600, followed by 24,500 and 24,400. On the upside, 25,000 will act as the first resistance level, followed by 25,400 and 25,600.

Global Economic Indicators

Oil prices eased on Thursday as unexpected builds in US crude and fuel inventories raised demand concerns. Meanwhile, the US dollar index declined slightly against a basket of major world currencies.