Benchmark equity indices cracked over 1 per cent on Monday as bears continued to outweigh bulls on the Dalal Street. The BSE Sensex tumbled 1.08 per cent or 824 points to end the day at 75,366.17 and the broader NSE Nifty50 ended 1.1 per cent or 263 points lower at 22,829.15 level amid continued selling by foreign investors and subdued corporate earnings.
The midcap and smallcap indices cracked 2.7 per cent and 3.5 per cent respectively as investors continued to pare holdings amid expensive valuations.
Since hitting record peaks in September, markets have been in a correction phase; as of Monday's close, the Sensex is down more than 12 per cent, from its life high of 85,978.25 touched on September 27, 2024.
"Broad-based selling across sectors plummeted the Indian market amid tepid earnings and weak sentiments across the globe. FIIs are on a selling spree due to moderation in economic growth and rupee depreciation. The weak sentiments were further exacerbated as the US trade confrontation continued, like with Columbia this time," said Vinod Nair, head of research at Geojit Financial Services.
So far in 2025 till January 24, foreign portfolio investors have sold a massive Rs 67,022 crore worth of shares from the Indian stock market amid uncertainty around how US President Donald Trump's trade and economic policies will play out. Investors will also be watching out for the Federal Open Markets Committee (FOMC) meeting later this week. After reducing interest rates by a full per cent in 2024, the Federal Reserve may hold rates this time. Domestically, all eyes are on the Union Budget that will be announced this Saturday, February 1.
"The markets are eagerly awaiting key developments such as the upcoming Budget and Donald Trump's trade and tariff decisions now that he has assumed power. If the Budget takes a negative turn, there is potential for the markets to experience a downturn," said Rakeshh Mehta, chairman of Mehta Equities.
The Union Budget comes in the backdrop of a slowing economy and sluggish urban demand. The hope is that Finance Minister Nirmala Sitharaman will announce measures, including enhancing basic income tax exemption limits and possibly even revising income tax slabs, to boost consumption.
The Budget will play a crucial role in shaping investor sentiment amid a slowdown in domestic economic growth and rising global uncertainty, noted analysts at Bajaj Broking.
"We anticipate that capital expenditure will see an increase, with a particular emphasis on key infrastructure sectors such as roads and highways, railways, and defence. In addition, we foresee some adjustments in income tax policies for middle-class households, which could provide a boost to disposable incomes, thereby encouraging greater discretionary consumption across the economy," said the analysts.
Asian markets were mixed on Monday, with the Nikkei 225 index in Japan dropping 0.9 per cent, while the Hang Seng in Hong Kong gaining 0.7 per cent. European stocks were trading mostly lower, with the DAX in Germany down 1.2 per cent. Nasdaq 100 as well as S&P 500 Futures were also down. Reports indicated that investors were concerned over profitability of AI (artificial intelligence) companies, amid growing popularity of a discount AI model in China and that drove shares of companies like Nvidia, Amazon and Tesla lower.
Back home, select banking stocks were among the gainers on Monday, following their quarterly results. Yes Bank, for instance, gained around 1.4 per cent and ICICI Bank rose 1.5 per cent. Bank of India's shares jumped over 6 per cent; the state-owned lender had reported a 35 per cent rise in profit last week.
Tech companies, on the other hand, were major losers, with HCL Tech, Tech Mahindra, Infosys and TCS tumbling between 2-5 per cent. Zomato and Swiggy continue to slip; the two food delivery platforms declined 4.5 per cent and 9 per cent respectively on Monday.
