Selling continues in Sensex and Nifty

On Monday, the Indian stock market witnessed a decline for the fourth consecutive session. Rising crude oil prices, weak rupee, and selling by foreign investors put pressure on the market.

• Sensex:
  • It opened at 76,629.90, down from the previous close of 77,378.91.
  • At an intraday low it fell to 76,535.24, a fall of more than 800 points (1%).
• Nifty 50:
  • Opened at 23,195.40 against previous close of 23,431.50.
  • During trading it fell 250 points to 23,172.70.

Selling was heavy in the mid and smallcap segments, with the BSE Midcap and Smallcap indices falling by up to 2%.

huge loss to investors

• Losses in the last four seasons:
  • The total market capitalization of BSE listed companies declined from Rs 430 lakh crore to Rs 425 lakh crore.
  • Investors suffered a loss of Rs 17 lakh crore in four days.

Due to decline in stock market

1. Rising prices of crude oil

• Oil prices reached their highest level in three months.
• US sanctions:
  • This could impact Russian oil supplies to major importers such as China and India.
• Due to crude oil inflation:
  • India’s import bill will increase.
  • There will be fiscal pressure and negative impact on the rupee.

2. Rupee weakness

• On Monday, the rupee fell by 23 paise to a record low of 86.27.
• The strengthening dollar and rising crude oil prices put the rupee under pressure.

3. Selling by Foreign Investors (FPI):

• FPIs sold shares worth Rs 16,982 crore in December.
• So far in January, sales worth Rs 21,350 crore have taken place.
• Last year, sales of Rs 1,14,445 crore were recorded in October and Rs 45,974 crore in November.

4. Rise in US bond yields:

• Bond yields rose on strong US economic data and the Federal Reserve looking less likely to cut interest rates.
• Due to this, foreign investors withdrew money from Indian markets.

5. Fear of weak third quarter results:

• Experts believe that results in Q3 will be weak, and market pressure may continue into Q4.

6. Vigilance related to Budget 2025:

• Investors are cautious as Union Budget 2025 approaches.
• If the budget remains populist, the market may fall further.

The impact of the US Fed and the global economy

• US Fed rate cut expectations low:
  • The Federal Reserve may keep interest rates on hold as US employment data remains strong.
• Uncertainty over Donald Trump’s trade policies:
  • Possible trade policies of the Trump administration may impact Asian markets including India.

impact on indian economy

• Poor growth rate:
  • The GDP growth rate in the financial year 2024-25 is estimated to be 6.4%, which is a four-year low.
• Fiscal Pressure:
  • Impact of crude oil and rupee weakness.

What should investors do?

1. Be cautious:
   • There will be fluctuations in the market.
2. Invest in Strong Stocks:
   • Focus on fundamentally strong companies with a long-term outlook.
3. Diversification:
   • Diversify your portfolio to reduce risk.