Sensex Plunges 750 Points, Nifty Dips Below 22,900 Amid Global Concerns
The Indian stock market experienced a significant downturn today, with the Sensex crashing 750 points and the Nifty falling below the 22,900 mark. This decline is attributed to a combination of global cues, tepid corporate earnings, uncertainty surrounding U.S. trade policies, and ongoing foreign fund outflows. The broader market also saw a sharp selloff, with midcap and smallcap indices plunging up to 4%.
At 10:45 am, the Sensex was down 750 points, or 0.98%, at 75,447, while the Nifty was down 227 points, or 0.98%, at 22,865. Market breadth was negative, with 550 shares advancing, 2,695 declining, and 155 remaining unchanged. The BSE Midcap index shed 3%, and the Smallcap index tumbled over 4%.
Global Factors Influencing the Market
U.S. stock futures and most Asian markets faced selling pressure as investors reacted to the launch of a free, open-source AI model by Chinese startup DeepSeek, seen as a potential rival to OpenAI's ChatGPT. Additionally, the U.S. dollar strengthened after President Trump imposed retaliatory measures on Colombia. Nasdaq Composite futures slid almost 2%, while S&P 500 futures dropped 1%. Japan's Nikkei shed 0.3%, while New Zealand's benchmark fell 0.6%. In contrast, Hong Kong's Hang Seng rose 0.9%, and mainland China's CSI 300 gained 0.2%, despite disappointing manufacturing data.
Market Analyst Insights
Ambareesh Baliga, an independent market analyst, noted that the typical pre-budget rally has not materialized. Investors are using any market upside to book profits or exit positions, leading to a weak market this week.
Foreign Fund Outflows and Earnings
India's benchmark indices concluded the previous week with their third consecutive weekly loss. Foreign portfolio investors (FPIs) have been net sellers, withdrawing a staggering ₹69,080 crore from Indian equities in January alone. The ongoing earnings season has also been a key driver of market sentiment. Results so far have been mixed, leaning slightly negative, with many companies falling short of expectations. Uncertainty around U.S.-India relations under President Trump is also contributing to investor anxiety.
Federal Reserve and Budget Anticipation
With only five trading sessions left before the Union Budget on February 1, investors are closely monitoring the U.S. Federal Reserve's rate decision scheduled for January 29. While the Fed is expected to hold rates steady, its commentary, especially in light of President Trump's push for lower borrowing costs, will be crucial for future monetary policy direction.
Stock-Specific Movements
ICICI Bank bucked the trend, rising 0.6% after reporting higher quarterly profits. However, Bharat Electronics, JSW Steel, BPCL, IndusInd Bank, and Power Grid Corp led the laggards on the Nifty 50, slipping 1-2%. On the positive side, Britannia, HUL, ITC, ICICI Bank, and Nestle were among the top gainers, climbing 0.5-2%.
Shares of CreditAccess Grameen plunged 17% after the company revised its full-year guidance downward.
Technical Outlook
According to Prashanth Tapse of Mehta Equities, Nifty is at risk of closing below the key 23,000 level, with next support at 21,281, due to a bearish technical setup.
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