Tuesday saw Indian stock markets take a hit, with the 30-share BSE Sensex dropping 281.95 points to 73,316.21 in early trade. The 50-share NSE Nifty followed suit, losing 63.15 points to 22,694.60 in early trade. This downturn came as a result of high crude oil prices and a sell-off in IT stocks, shaking investor confidence.
Among the major losers on the Sensex were heavyweights like Infosys, Hindustan Unilever, Tata Consultancy Services, Asian Paints, HCL Tech, and Tech Mahindra. However, there was a bit of a silver lining. Companies such as Bharat Electronics, Eternal, Maruti, and InterGlobe Aviation managed to post gains, providing some much-needed relief to the markets.
Brent crude oil, a key global benchmark, traded 0.74% lower at $115 per barrel. The persistent high prices of crude oil, along with the U. S. 10-year bond yield hovering around 4.97%, pose significant challenges for the market in the near term. V. K. Vijayakumar, chief investment strategist at Geojit Investments Limited, pointed out that these factors are keeping Foreign Institutional Investors (FIIs) in a risk-off mode. This is despite improving corporate fundamentals and strong domestic fund inflows.
On the previous trading day, FIIs offloaded equities worth ₹1,462.49 crore, according to exchange data. Ponmudi R., CEO of Enrich Money, noted that Indian equity markets are likely to proceed with caution due to the high crude oil prices, with WTI crude trading near the $101-per-barrel mark. He also highlighted that investor sentiment remains cautious ahead of the U. S. Federal Reserve's policy decision. This decision could impact U. S. Treasury yields and the dollar, which in turn might influence foreign capital flows into emerging-market equities.
In the broader Asian market, there were mixed results. South Korea's Kospi and Japan's 225 index recorded substantial gains, while China's SSE Composite index and Hong Kong's Hang Seng index reported losses. Meanwhile, U. S. markets closed higher on Monday, adding another layer to the global financial landscape.
Federal Reserve Meeting
The U. S. Federal Reserve kicked off its two-day meeting on Tuesday, drawing keen attention from market participants looking for guidance on inflation. Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, emphasized that while the interest rate decision is expected to remain unchanged, any hawkish signals could boost yields and the dollar. This could potentially restrict capital flows to emerging markets. On the flip side, balanced guidance might support a broader equity recovery.
On Monday, the Sensex had ended on a high note, rising 482.92 points to 73,606.75, while the Nifty climbed 153.20 points to close at 22,753.20. But that upward trend was reversed on Tuesday as market dynamics shifted.
