Midday Market: Sensex drops over 600 points; Nifty slips below 23,550 amid global cues

Benchmark indices slumped in early trade on January 8, with the Sensex falling over 600 points and the Nifty slipping below the 23,550 mark.

Weak global cues, dwindling hopes of a US Fed rate cut, and cautious sentiment ahead of Q3 FY25 earnings weighed on the market.

The Sensex plunged 635.61 points, or 0.81 per cent, to touch an intraday low of 77,563.50, while the Nifty lost 184.25 points, or 0.77 per cent, to trade at 23,523.65.

Recent data revealed robust U.S. economic performance, with services sector activity accelerating in December and job openings surging in November. This resilience dampens expectations of multiple Federal Reserve rate cuts in 2025, impacting global market sentiment.

Markets are now factoring in the possibility of just one Fed rate cut this year, down from two estimated in December, as per the CME FedWatch tool. This adjustment follows the Fed’s prior guidance of two cuts in 2025, already halved from earlier projections.

Sensex drags as major stocks slide

Key laggards in the Sensex pack included Zomato, Adani Ports, IndusInd Bank, Tata Steel, and NTPC, with losses of up to 2 percent. Meanwhile, Reliance Industries, TCS, M&M, Maruti Suzuki, and Sun Pharma emerged as early gainers, offering some respite amid the broader market decline.

The shift in Fed expectations and domestic headwinds, including cautious sentiment ahead of Q3 earnings, have kept investors on edge, reflecting the ongoing volatility.

Key factors dragging the market

GDP growth concerns: Government estimates project India’s GDP to grow at 6.4 per cent in FY25, the slowest in four years, raising concerns over the country’s economic trajectory.

Fed rate hike fears: Robust US jobs data and a resilient services sector dampened expectations of a rate cut by the Federal Reserve. The US 10-year bond yield spiked to 4.67 per cent, strengthening the dollar and weakening emerging markets.

Rising crude prices: Brent crude climbed 0.38 per cent to $77.34 per barrel due to supply concerns and rising demand, adding pressure on India’s oil-import-dependent economy.

FII outflows: Foreign Institutional Investors (FIIs) offloaded Indian equities worth Rs 1,491.46 crore on January 7, continuing a selling spree that began in Q2.

Q3 earnings jitters: Investors remain cautious as TCS kicks off the earnings season on January 9. Subdued corporate performance in the previous quarter has kept sentiment subdued.

Expert view

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, “The trend of strong US macros weakening emerging markets continues. With rising bond yields and a stronger dollar, FIIs are likely to keep selling, pressuring the market. However, investors with a long-term horizon can consider large caps in financials, IT, pharmaceuticals, and select autos, which could rebound as macros improve.”

As markets brace for upcoming Q3 results and the Union Budget, selective stock picking is advised to navigate the ongoing volatility.