The Indian stock market witnessed a significant meltdown on Thursday as the Sensex tumbled by 1,190 points (1.48%) to close at 79,043, while the Nifty fell 361 points (1.49%) to settle at 23,914. This steep decline, primarily driven by a selloff in IT stocks, was compounded by global economic concerns and uncertainty over U.S. Federal Reserve policies.
The sharp selloff in IT stocks weighed heavily on the markets, with the Nifty IT index dropping by 2.3%. Infosys, HCL Tech, LTTS, and Tech Mahindra were among the biggest losers, with declines ranging from 2% to 3.5%. Weak U.S. inflation data, indicating a slower pace of Federal Reserve rate cuts, raised concerns about the future growth prospects of Indian IT companies that depend heavily on U.S. clients.
Global markets mirrored the losses, with Asian indices declining as persistently high U.S. inflation dampened hopes for aggressive interest rate cuts. A strong dollar index, which stood at 106.39, and higher U.S. Treasury yields (10-year at 4.25%) prompted capital outflows from emerging markets like India. Concerns over potential tariffs under U.S. President-elect Donald Trump’s policies and geopolitical tensions in Ukraine further soured sentiment.
In an otherwise gloomy session, Adani Group stocks offered a bright spot. Adani Total Gas surged nearly 16%, while Adani Green Energy and Adani Enterprises saw gains of up to 10%. The rally came after the conglomerate clarified allegations of legal violations in the U.S., helping the group recover a portion of its recent losses.
The selloff was exacerbated by the monthly expiry of derivative contracts, which added to market volatility. Foreign Institutional Investors (FIIs), who had recently turned buyers, slowed their purchases to ₹7.78 crore after three days of consistent buying.
The global risk environment remains somewhat restrained due to conditions affecting the US Federal Reserve and inflation as well as economic pressures. Technical experts look at 24,000 on the Nifty as a mean reversion level.
Markets should be entered cautiously and that is the same message I wish to extend to our investors especially in vulnerable markets such as the IT market.