At the time of writing, the BSE Sensex was down by 777.72 points, or 1.02%, trading at 75,412.74
The Indian stock market opened on a cautious note this Monday, reflecting mixed global and domestic cues. Both benchmark indices, the BSE Sensex and Nifty50, extended their losing streak, showing declines across most sectors.
BSE Sensex and Nifty50 Performance
At the time of writing, the BSE Sensex was down by 777.72 points, or 1.02%, trading at 75,412.74. Similarly, the Nifty50 shed 245.85 points, or 1.06%, to trade at 22,846. The decline in these indices was driven by weak performances in sectors like metals, media, and consumer durables.
Among the Sensex constituents, only four stocks managed to stay in the green, led by Hindustan Unilever with a gain of 0.98%. ICICI Bank, ITC, and Asian Paints also showed modest gains. On the losing side, Zomato dropped by 2.39%, followed by IndusInd Bank, Tata Motors, Power Grid Corp, and Tata Steel.
The Nifty50 showed a similar trend, with seven stocks trading higher. Gains were led by Britannia Industries, which climbed by 1.58%, followed by Hindustan Unilever, Dr. Reddy’s, ICICI Bank, and Nestle India. The losers included Shriram Finance, down 2.46%, along with JSW Steel, BEL, Power Grid Corp, and IndusInd Bank.
Sectoral Indices Under Pressure
Sectoral indices painted a grim picture, with the Media index being the top laggard, falling by 2.42%. The Metal index followed closely, declining by 1.77%, while the Consumer Durables index slipped by 1.63%. Other major indices such as Nifty Bank, Auto, Financial Services, IT, Pharma, Private Bank, and Oil and Gas also recorded losses, ranging from 0.53% to 1.05%.
FMCG and Realty indices were the only bright spots, showing marginal gains of 0.13% and 0.29%, respectively. Broader markets, however, suffered significantly, with the Nifty Midcap 100 falling by 1.71% and the Nifty Smallcap 100 dropping by 2.91%. India VIX, a measure of market volatility, surged by 6.19% to 17.78, indicating heightened investor anxiety.
Global Cues and Market Sentiment
Global markets reflected a mixed picture. Asian markets were mostly lower, with Japan’s Nikkei 225 dropping by 0.6%. China’s CSI 300 was down by 0.88%, while Hong Kong’s Hang Seng index managed a gain of 0.84%. Australian, Taiwan, and South Korean markets were closed for holidays.
Uncertainty surrounding the Federal Open Market Committee (FOMC) meeting on January 28-29 added to the volatility. Speculation about potential policy changes and the impact of new US tariffs introduced by the Trump administration have contributed to the cautious sentiment globally. US markets also displayed volatility in the previous week, reflecting concerns about inflation and monetary policy adjustments.
Foreign Portfolio Investors and Domestic Pressure
The Indian equity market continues to face selling pressure from foreign portfolio investors (FPIs), who have withdrawn ₹64,156 crore ($7.44 billion) this month. This exodus is attributed to factors like the depreciation of the rupee, rising US bond yields, and expectations of muted corporate earnings for the December quarter.
Domestic investors are closely monitoring the upcoming Union Budget 2025-26, set to be announced on February 1. Expectations include measures to stimulate consumer spending, accelerate infrastructure modernization, and boost job creation. While corporate leaders remain optimistic about the government’s ability to address these challenges, the market remains under pressure due to immediate headwinds.
Technical Analysis: Falling Wedge Pattern
Technical analysts have pointed out that the Nifty50 has recorded its third consecutive weekly decline, leaving it exposed to further losses. The index is now down by 12.6% from its peak in September 2024, with the Nifty Midcap 100 and Smallcap 100 also declining by 12.1% and 13.7%, respectively.
Rajesh Bhosale, a technical analyst at Angel One, observed that the price movements since September have formed a “falling wedge” pattern, which typically signals continued volatility. Key support levels remain untested, indicating that the downward trend may persist in the short term.
Primary Market Activity
In the primary market, several initial public offerings (IPOs) from both the mainline and SME sections are in focus. The allotment for Denta Water and Infra Solutions Limited and Rexpro Enterprises Limited IPOs will be finalized today. CapitalNumbers Infotech Limited IPO is set to list, while CLN Energy Limited continues with its subscription window. H.M. Electro Mech Limited and GB Logistics Commerce Limited IPOs are on their second day of subscriptions.
Economic Indicators and Corporate Earnings
The December quarter results are being scrutinized to assess the economy’s growth trajectory. Early trends in Q3 results and management commentary have not been promising, according to analysts. Automobile companies are expected to post revenue growth between 7-13% during Q3, driven by robust rural demand and new launches. However, earnings before interest, taxes, depreciation, and amortization (EBITDA) growth may remain constrained, with brokerages estimating a range of 9-13%.
Meanwhile, economists have emphasized the need for durable liquidity infusion to revive the economy, as a rate cut alone may not be sufficient. Pre-policy consultations with the Reserve Bank of India (RBI) have highlighted this concern, with experts urging the central bank to address the issue comprehensively.
Global Developments Impacting Markets
In China, factory activity contracted unexpectedly in January, reversing the expansionary momentum of the past three months. The official purchasing managers’ index (PMI) for January fell to 49.1, indicating contraction. Non-manufacturing PMI also dropped, reflecting sluggish services and construction activity.
Oil prices have stabilized after initial losses, with US crude futures trading at $74.66 per barrel and Brent crude at $78.50 per barrel. The US dollar firmed slightly as traders assessed the impact of new tariff policies and the Federal Reserve’s anticipated decisions during the upcoming FOMC meeting.
The Indian stock market remains under pressure as global uncertainties and domestic challenges weigh on investor sentiment. The upcoming FOMC meeting and Union Budget announcements are key events that could shape the market’s trajectory in the coming weeks. While some sectors like FMCG and Realty show resilience, broader markets and most indices face significant headwinds. As volatility persists, market participants are likely to remain cautious, awaiting clarity on macroeconomic policies and corporate earnings.
