Market Turmoil: Stocks Slide Amid Weak Global Cues and Domestic Concerns
- Hash Take
- Jan 7
- 2 min read
Updated: Jan 8
HDFC Bank Ltd shares dropped 1.56% to ₹1,722 following its Q3 update. December marked the third consecutive quarter of sequential corporate loan decline, as the bank prioritized profitability over balance sheet growth. Broader markets also faced significant pressure, with the Sensex and Nifty both witnessing steep declines.
The Sensex fell below the 80,000 mark, trading at 77,992.30, down 1,231 points or 1.55%, while the Nifty tumbled 1.72% to 23,591.60. Small-cap and mid-cap indices also bore the brunt, sliding up to 3%. The market was weighed down by weak global cues, including rising US bond yields, a stronger dollar, and crude oil prices climbing to their highest level since October 2024.
Adding to investor anxiety, fears of Foreign Portfolio Investor (FPI) outflows intensified as the rupee weakened to a record low of 86 against the US dollar. Data from NSDL revealed that FPIs sold equities worth ₹4,285 crore in January so far. The upcoming earnings season further fueled investor jitters.
Sectoral and Stock Highlights
ITC Ltd shares dropped to ₹452 on Monday, becoming ex-date for the demerger of its hotel business. The stock was adjusted by ₹27 from its previous close of ₹482, exceeding analyst expectations of ₹16-25 adjustments per share. ITC was a significant contributor to the declines in Sensex and Nifty.
Tata Steel slid 3.62% to ₹133.20, while other major decliners included Kotak Mahindra Bank, Power Grid, Asian Paints, Adani Ports, Mahindra & Mahindra, and IndusInd Bank, each falling over 2%.
HDFC Bank saw its shares fall 1.56% to ₹1,722, as the bank continues to grapple with declining corporate loans.
Global and Domestic Factors
The market downturn coincided with concerns over a global economic slowdown, elevated US bond yields, and a firm dollar. Additionally, news of two human metapneumovirus (HMPV) cases detected in India added to investor caution, as the virus, which has no vaccine, has been spreading rapidly in China.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that external macro factors remain unfavorable, with the dollar index at 109 and the 10-year US bond yield at 4.62%. “FIIs are likely to continue selling until yields decline and the dollar stabilizes,” he said.
On the domestic front, Vijayakumar highlighted that December auto sales data suggest concerns about urban demand slowdown may be overstated. He expects buying to resume in resilient domestic segments, providing some support to the market during declines.
CLSA’s Outlook
CLSA, in its January 3 note, made adjustments to its India focus portfolio, adding Tata Motors, NTPC, Nestle India, and Britannia while removing HDFC Bank. The firm also significantly reduced its overweight position in banks. CLSA remains overweight on commodities and insurance but underweight on IT, discretionary, industrials, and healthcare.
Their strategy note stated, “The combination of an uncertain global macro environment and a near-term economic slowdown in India, coupled with high valuations, points to muted returns for the Nifty in 2025.”
As markets navigate these headwinds, investors remain cautious amid heightened volatility and weak global signals.
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