Last Updated:
Indian benchmark equity indices, the BSE Sensex and Nifty50, opened sharply lower on Monday due to growing global concerns.
Stock Market Crash
Indian benchmark equity indices, the BSE Sensex and Nifty50, opened sharply lower on Monday due to growing global concerns.
At the start of trading, the BSE Sensex fell by 800.29 points, or 1.03%, to 76,578.62, while the Nifty50 dropped 218.40 points, or 0.93%, to 23,213.10.
After the opening bell, on the 30-stock BSE Sensex, only two stocks—IndusInd Bank (up 2.33%) and Axis Bank (up 0.35%)—were in the green, while the rest of the index faced declines. Leading the losses was Zomato (down 3.02%), followed by Mahindra & Mahindra, Tata Steel, Power Grid, and Tata Motors.
On the Nifty50, only five stocks were trading higher: IndusInd Bank (up 2.27%), Shriram Finance, HCLTech, Britannia Industries, and Maruti Suzuki India. The biggest laggards were BPCL (down 2.03%), followed by Apollo Hospital Enterprises, Mahindra & Mahindra, SBI Life, and BEL.
Across the board, all sectors were trading in the red. The Realty index saw the sharpest decline, shedding 2.42%. Other sectors that fell by more than 1% included Consumer Durables, Healthcare, Metals, Autos, Oil, PSU Banks, and Pharma.
The Bank, Financial Services, IT, and FMCG indices also posted significant losses.
The broader markets were under pressure as well, with the Nifty Midcap 100 losing 1.46% and the Nifty Smallcap 100 down 1.36%. India’s volatility index, the India VIX, surged by 6.78%, reaching 15.93.
‘FIIs will continue to sell, offering opportunities for long-term investors’
“Market will continue to be under pressure from the many strong headwinds. The blow out jobs data from the US with 2.56 lakh job creation in December against expectations of 1.65 lakhs means the rate cut expectations in 2025 is now down to one. With the unemployment in the US down to 4.1 per cent the economy doesn’t need any stimulus. This good economic news is turning out to be bad news for markets which were discounting many rate cuts this year.
For India, the Brent crude rising to $81 is a concern. But the IIP data for November at 5.2 per cent indicates that the economy is recovering from the slowdown in Q2.
The strength of the US economy augurs well for IT stocks which have been resilient even during weakness in the market. Pharma and health care stocks will be under less pressure since the demand situation is good. With the US 10-year bond yield above 4.7 per cent, FIIs will continue to sell offering opportunities for long-term investors to buy reasonably priced large-caps, particularly in banking. The broader market will continue to be under pressure.”
Views by: Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services
Global Cues
Asian markets declined on Monday, while the dollar remained near 14-month highs, following a stronger-than-expected US jobs report. The robust payrolls data contributed to rising bond yields and raised concerns over high equity valuations just as earnings season begins.
The US Labor Department’s data revealed that the economy added 256,000 jobs in December, surpassing analysts’ expectations of 160,000, according to a Reuters poll.
This strong jobs report has heightened the focus on Wednesday’s consumer price index data. Any core inflation rise exceeding the forecasted 0.2% could significantly diminish expectations for rate cuts.
Adding to market pressure, oil prices surged to four-month highs due to signs of reduced crude shipments from Russia, following heightened US sanctions.
Markets have already tempered their expectations for Federal Reserve rate cuts in 2025, now anticipating only a 27 basis point reduction for the year. The terminal rate is seen around 4.0%, down from earlier expectations of 3.0%.
Barclays’ Christian Keller stated, “Given such strong data, we now expect the Fed to cut rates only once this year, by 25bps in June.” He noted that the economy is likely to slow in the coming quarters, with inflation continuing to decline before tariffs contribute to inflationary pressure in the second half.
At least five Federal Reserve officials are scheduled to speak this week, with New York Fed President John Williams addressing the market on Wednesday.
The hawkish stance on rates has pushed 10-year Treasury yields to 14-month highs of 4.79%, trading at 4.764% in Asia.
Higher yields on risk-free bonds increase the discount rate for corporate earnings, making bonds more attractive relative to equities, cash, property, and commodities. This could impact investor sentiment as earnings season begins, with major banks like Citigroup, Goldman Sachs, and JPMorgan reporting on Wednesday.
In Asia, a holiday in Japan led to lighter trading volumes, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.4%. Hong Kong’s Hang Seng Index dropped 1.6%, trading below 19,000 for the first time since last September. The CSI 300 index in mainland China fell by 0.38%, and the Shanghai Composite declined 0.37%. South Korea’s Kospi lost 0.85%, while Australia’s S&P/ASX 200 dropped 1.24%.
In China, trade data for December is expected later on Monday, followed by GDP, retail sales, and industrial output figures on Friday.
US stock futures also showed declines, with S&P 500 futures and Nasdaq futures both down by 0.1%, following Friday’s pullback. Wall Street finished lower on Friday, with 10 out of 11 S&P 500 sectors closing in the red, led by declines in financials, real estate, technology, and consumer staples. Energy stocks were the only sector to finish higher. The three major indices marked their second consecutive week of losses.
The Dow Jones Industrial Average fell 1.63% to 41,938.45, the S&P 500 dropped 1.54% to 5,827.04, and the Nasdaq Composite lost 1.63% to 19,161.63.
The rising Treasury yields have supported the dollar, causing the euro to fall for eight consecutive weeks and hover just above $1.0240, its lowest level since November 2022.
