As of midday trading, the BSE Sensex saw a steep decline of 788 points, or 1.00 per cent, dropping to 75,432.65. The NSE Nifty followed suit, slipping 238.05 points or 1.03 per cent, and standing at 22,850. Weak sentiment continues to prevail, with multiple domestic and global factors causing investor jitters. Zomato Ltd emerged as the worst performer in the Sensex, shedding 2 per cent and trading at Rs 211.
Foreign Portfolio Investor (FPI) selling continues to weigh on markets
One of the major reasons behind today’s downturn is the ongoing outflow of foreign funds. As of January, FPIs have pulled out Rs 69,000 crore from Indian markets, a trend that has significantly overshadowed the buying by Domestic Institutional Investors (DIIs), who have invested Rs 67,000 crore in the same period. This sustained FPI selling is creating a negative atmosphere, with investor confidence being further eroded.
Global concerns: Trade tensions and tariff fears
The ongoing global trade tensions are another key concern. The market remains cautious due to new threats from the U.S. President Donald Trump’s administration, including the imposition of a 25 per cent tariff on Colombian goods. With similar threats to Mexico and Canada, investors are wary of potential disruptions in global trade. Analysts suggest that these global uncertainties are causing a rise in risk aversion among investors.
Quarterly earnings and pre-Budget jitters
Market participants are also nervously awaiting the Union Budget 2025, scheduled for February 1, and the Reserve Bank of India’s monetary policy decision next week. The mixed quarterly earnings have added to the uncertainty, with profit booking being observed as investors prepare for the budget. Some sectors, such as IT and metal stocks, have been hit hard, as concerns about global economic growth persist.
Looking ahead: What’s next for the markets?
As the market continues its downward trajectory, experts suggest that the Union Budget will play a pivotal role in shaping investor sentiment. Analysts are hopeful for fiscal stimulus through income tax cuts, which could potentially provide a much-needed boost. However, if these expectations are unmet, the market could face further selling pressure. The next few days will remain critical as the markets await the announcements from both the U.S. Federal Reserve and the Indian government.
Key stocks to watch:
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Zomato Ltd, IndusInd Bank, Adani Ports, Tata Motors, Infosys, Tech Mahindra, NTPC, HCL Technologies – all are facing significant losses, with many of these stocks dipping over 1 per cent each.
