08-Jan-2025, 02:19 PM
On Wednesday, January 8, 2025, Indian stock markets witnessed a significant downturn as both the Nifty and Sensex indices continued to decline amid persistent selling pressure from foreign institutional investors (FIIs). The Sensex plunged by over 700 points, while the Nifty fell below the critical threshold of 23,550, marking a challenging day for investors.
Market Performance
By midday, the Sensex was down approximately 704.67 points or 0.90%, trading at 77,494.44, while the Nifty dropped by 207.55 points or 0.88% to reach 23,500.35. This broad-based sell-off was characterized by a staggering number of declining stocks; about 2,463 shares fell compared to only 925 that advanced. The market capitalization of the Bombay Stock Exchange (BSE) eroded by approximately ₹3.33 lakh crore, reflecting the widespread impact of the downturn on investor wealth.
Factors Contributing to the Decline
Several factors contributed to this market slump:
Global Economic Concerns: Strong economic data from the U.S., including robust job numbers and a thriving services sector, raised fears that inflation could rebound, potentially slowing down the Federal Reserve’s plans for monetary policy easing. This environment has led to increased U.S. bond yields, with the 10-year yield rising to 4.67%, further straining emerging markets like India.
Anticipated Earnings Slowdown: Investors are bracing for a slowdown in corporate earnings as the Q3 earnings season approaches, with expectations of only modest growth for Nifty companies between 2-6%. The first major report from Tata Consultancy Services (TCS) is set to kick off this earnings season on Thursday.
Sectoral Weakness: Most sectors faced declines, with notable laggards including IT, banking, and real estate indices dropping between 1.5% and 2%. The small-cap and mid-cap indices also reflected this negativity, falling by approximately 2% and 1.8%, respectively15.
Market Outlook
Market analysts suggest that if the Nifty breaks below the support level of 23,500 decisively, it could lead to further declines towards levels of 23,200 or even lower. Conversely, resistance is expected around the 23,900-24,000 range1. As FIIs continue their selling spree amid these macroeconomic pressures and uncertainties surrounding domestic growth forecasts—projected at a slower rate of 6.4% for FY25—investors are advised to exercise caution in their trading strategies moving forward.
In summary, Wednesday’s market performance underscores a challenging environment for Indian equities as external economic factors and internal earnings expectations converge to create a volatile trading atmosphere.
