Indian stock market fell off a cliff on Thursday morning.
Both the benchmark indices were down over 1% in early trade on Thursday.
The Sensex dropped below the 80,000 mark, while the Nifty 50 fell below 24,000.
The Indian stock market’s decline mirrored a broader downturn across US and Asian markets after the US Federal Reserve implemented its third consecutive rate cut but hinted at a slowdown in future reductions, unsettling investors.
Foreign institutional investors (FIIs) also extended their selling spree in Indian equities, offloading shares worth ₹1,316.81 crore (£123 million) on Wednesday.
Indian stocks in focus
All 30 stocks in the benchmark Sensex were in the red on Thursday morning.
The BSE Sensex was pulled down on Thursday by index heavyweights, with HDFC Bank contributing a loss of 173 points, Infosys 150 points, ICICI Bank 112 points, and Reliance Industries 98 points.
All sectors were trading in the negative on Thursday, with the IT sector facing severe pressure, falling over 2%.
The Indian IT sector, which is heavily reliant on services exports, faces challenges in a higher interest rate environment in the US.
When bond yields spike and the dollar strengthens, it increases the cost of IT services for US clients, potentially dampening demand.
Other sectors under pressure included Nifty Metal, which declined by 1.76%, and Nifty PSU Bank, which fell 1.65%. Nifty Pharma, Nifty Private Bank, Nifty Financial Services, Nifty Healthcare, and Nifty Consumer Durables were also trading in the red in intraday deals.
Indian rupee continues to tumble
The rupee extended its decline, breaching the 85 mark against the US dollar for the first time in history, following the US Fed’s decision. This pushed the dollar index to a two-year high.
On December 19, the rupee opened at 85.04 against the US dollar, further weakening from the previous day’s close of 84.96.
The dollar index, which gauges the US currency against six major currencies, rose to a two-year high of 108.086, up 0.05%, marking its highest level since November 2022.
Asian markets in turmoil
Market sentiment across Asia was subdued following the US Federal Reserve’s forecast of only two more rate cuts in 2025.
Japan’s Nikkei 225 fell 1% in early trade, with the yen weakening to a one-month low against the dollar.
After the Bank of Japan’s decision to keep its policy rate at 0.25% for the third consecutive meeting, the Nikkei narrowed its losses, trading 0.63% lower, while the broader Topix index slipped 0.49%.
Hong Kong’s Hang Seng index dropped nearly 1%, driven by sell-offs in financial and technology stocks.
In China, the Shanghai Composite declined 0.3% to 3,371, impacted by reports of potential US sanctions on China’s TP-Link Technology Co.
However, investor sentiment was supported by expectations of increased fiscal spending by Beijing in 2025.
South Korea’s Kospi index reversed its brief recovery from Wednesday, falling 1.6%, led by losses in major technology stocks.
US markets on Wednesday
Overnight in the US, the Dow Jones Industrial Average plummeted by 1,123.03 points, or 2.58%, closing at 42,326.87, marking its first 10-day losing streak since 1974.
The S&P 500 fell 2.95% to 5,872.16, while the Nasdaq Composite dropped 3.56% to 19,392.69.
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