Indian equity markets witnessed a sharp sell-off in early trade on Monday, with the BSE Sensex tumbling over 700 points and the NSE Nifty slipping below the crucial 24,000 mark. The decline was broad-based, led by heavyweights in information technology (IT), banking, and financial services sectors.
Market Performance at Opening Bell
The 30-share BSE Sensex plunged 703.62 points to 78,492.38 in the initial hour of trading. The broader Nifty50 of the National Stock Exchange (NSE) declined 215.85 points to 23,947.40, breaching the psychological support level of 24,000. The sell-off was exacerbated by weak global cues, as Asian markets traded lower following a negative close on Wall Street last Friday.
Key Draggers
Among the Sensex constituents, major losers included Infosys, Tata Consultancy Services (TCS), HDFC Bank, ICICI Bank, and Reliance Industries. The IT sector was the worst hit, with the Nifty IT index falling over 2%, as concerns over potential US recession weighed on sentiment. Banking stocks also came under pressure, with the Nifty Bank index declining over 1%.
Other notable laggards were Mahindra & Mahindra, Larsen & Toubro, and Kotak Mahindra Bank. On the gaining side, only a few stocks managed to stay afloat, including Sun Pharma, Nestle India, and Hindustan Unilever, which offered some support to the indices.
Global Cues Weigh Heavily
The domestic market weakness mirrored global trends, with Asian shares falling after US stocks ended lower on Friday. The Dow Jones Industrial Average fell 0.6%, the S&P 500 dropped 0.7%, and the Nasdaq Composite lost 0.9%, as disappointing economic data and rising bond yields dampened investor sentiment. The sell-off in global markets was driven by fears that the US Federal Reserve might keep interest rates higher for longer, potentially slowing economic growth.
In Asia, Japan's Nikkei 225 shed 1.2%, China's Shanghai Composite declined 0.8%, and Hong Kong's Hang Seng index fell 1.5% in early trade. South Korea's Kospi also traded lower by 0.9%.
Sectoral Impact
On the sectoral front, all major indices traded in the red, with IT, realty, and auto sectors witnessing the steepest declines. The Nifty IT index slumped 2.3%, while the Nifty Realty index fell 1.8%. The Nifty Auto index declined 1.5%, dragged by Maruti Suzuki and Tata Motors. The Nifty Metal index also traded lower by 1.2%.
Midcap and smallcap stocks were not spared either, as the BSE Midcap index fell 1.1% and the BSE Smallcap index declined 0.9%. The overall market breadth was negative, with about three declining stocks for every advancing stock on the BSE.
Technical Outlook
According to market analysts, the Nifty has broken below its key support level of 24,000, which could trigger further selling in the near term. The next support for the index is seen at 23,800, while resistance is placed at 24,200. The Relative Strength Index (RSI) on the daily chart has slipped below 50, indicating a bearish momentum.
Investors are advised to remain cautious and avoid aggressive bets until the market stabilizes. The ongoing earnings season and global macroeconomic data will be closely watched for further cues.
Rupee and Bond Market
The Indian rupee also weakened against the US dollar, trading at 83.65, down 12 paise from the previous close. The 10-year government bond yield edged up to 7.12%, reflecting the risk-off sentiment in the market.
Foreign portfolio investors (FPIs) have been net sellers in the Indian equity market, pulling out over ₹10,000 crore in the last two weeks. Domestic institutional investors (DIIs) have partially offset the selling, but the overall sentiment remains fragile.
In the commodity market, crude oil prices traded mixed, with Brent crude hovering around $82 per barrel. Gold prices edged higher, with spot gold rising 0.3% to $2,340 per ounce, as investors sought safe-haven assets amid the market turmoil.
The market is expected to remain volatile in the coming sessions, with traders eyeing the release of key US economic data and the outcome of the Federal Reserve's policy meeting later this month.
