Nifty, Sensex continue to slide for fourth session in a row: here's why

Indian equities continued their southward journey for the fourth straight session on Monday (January 13, 2025) amid broad-based sell off. In the ongoing rout, both the headline indices- Nifty and Sensex have plunged as much as 2 per cent.

At around 10:20 am, the BSE 30-share Sensex pared some of its early losses in a highly volatile session and was down 0.63 per cent or 484.82 points at 76,894.09, while the Nifty50 was down 0.71 per cent or 165.4 points at 23,266.1.

Here are the likely reasons for today's slump in the stock market:

Markets tempered expecations around the Federal Reserve rate cut this year

After the stronger-than-expected payroll date released over the weekend, the market participants tempered expectations over the Fed rate cut this year. The lower rates in the US economy generally encourage capital flows into emerging market economies.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, "Market will continue to be under pressure from the many strong headwinds. The blow out jobs data from the US with 2.56 lakh job creation in December against expectations of 1.65 lakhs means the rate cut expectations in 2025 is now down to one. With the unemployment in the US down to 4.1% the economy doesn’t need any stimulus."

This good economic news is turning out to be bad news for markets which were discounting many rate cuts this year, he added.

FII selling seen to continue

With the US 10-year bond yield above 4.7 % FIIs will continue to sell offering opportunities for long-term investors to buy reasonably priced large-caps, particularly in banking, added Vijaykumar. So far, in the CY 2025, FIIs have net sold Indian equities worth Rs 21,357.46 crore.

Higher crude price

The brent crude prices moved beyond $81 per barrel mark, scaling a three-month high in early trade on Monday. The rally in the commodity came amid expectations that expanded US sanctions on Russian oil producers and 183 vessels will lead to supply disruption of Russian crude to major importers China and India.

Broader-market weakness

Indian equities continue to feel the heat of the downside in the broader markets. At the time of writing this copy, Nifty Midcap 100 index was down 1.52 per cent, while Nifty Smallcap 100 index traded with a cut of 1.3 per cent.

Technical factors

Anand James, Chief Market Strategist, Geojit Financial Services on the Nifty outlook said, "Being in close vicinity of the recent low of 23263, a downside break is imminent bringing 23000 and 22260 onto the radar. We will require a push above 23540 to signal strength, while a slippage towards 23000 could as well provide an opportunity for bulls to regroup."

Catch all the latest stock market updates here. For all other news related to business, market, tech and auto, visit Zeebiz.com.