Sensex, Nifty plunge amid foreign fund outflows, IT stock pressure
The Indian stock market remains bearish today, with benchmark indices Sensex and Nifty plunging sharply. The fall is mainly due to persistent foreign fund outflows and selling pressure on IT stocks. The Nifty, despite an early recovery attempt, traded down by 0.12% at 23,505.55 points as of 12:40pm. This marks a sharp correction of over 10% from its all-time highs in September.
Global factors influencing Indian stock market
Global brokerage firm Citi downgraded Indian equities citing weakening earnings momentum. The decision was influenced by disappointing September quarter results, which have shaken investor confidence. US Federal Reserve Chairman Jerome Powell's cautious stance on rate cuts has also affected the market. Powell said the Fed is not in a hurry to cut rates, citing the resilience of the US economy.
IT stocks suffer amid market uncertainty
The Nifty IT index fell sharply by nearly 3% as Powell's comments soured investor sentiment. Heavyweights like Tech Mahindra, Infosys, TCS, and Wipro fell by 2-4%. Mid-cap IT stocks like Coforge, L&T Technology Services, Persistent Systems, and Mphasis also lost 1-2%. This sector-wide rout has added to the overall bearish sentiment in the Indian stock market.
Geopolitical tensions and FII selling impact market
Geopolitical tensions have also contributed to the bearish mood on Dalal Street. US President Joe Biden's authorization for Ukraine to use US-supplied missiles for deeper strikes inside Russia, and reports of Iran's Supreme Leader Ayatollah Ali Khamenei being in a coma, have added to market uncertainties. Foreign Institutional Investors (FIIs) sold equities worth ₹1,849.87 crore on Thursday, bringing November's total outflows to ₹22,420 crore due to high domestic stock valuations and a stronger US Dollar.
Market volatility and Rupee's performance
The India VIX, a measurement of market volatility expectations, climbed 5% to 15.51, reflecting heightened fear among traders as well as continued market uncertainty. "Weak leads from Wall Street and rising US bond yields add to the anxiety," Prashanth Tapse of Mehta Equities Ltd said. Meanwhile, the Indian Rupee, weighed down by inflation and a spike in US Treasury yields, gained 8p against the US Dollar in early trade but remains weak.
