Amid weak global cues, domestic equity benchmark indices fell up to 0.64% on Tuesday, largely driven by the sharp depreciation of the rupee, which hit a fresh record low and breached the 91-mark for the first time amid persistent FPI outflows.
The Sensex slumped 533.50 points, or 0.63%, to close at 84,679.86, while the Nifty fell 167.20 points, or 0.64%, ending the session below the 26,000 mark at 25,860.10. However, the decline in Indian equities was relatively modest compared with other major Asian markets, with South Korea falling 2.24%, Japan 1.56%, Hong Kong 1.54%, Taiwan 1.19% and China 1.11%.
Investors’ wealth eroded by Rs 3.02 lakh crore to Rs 467.85 lakh crore.
What did Vinod Nair say?
“Continued INR weakness to fresh record lows, driven by persistent FII outflows and subdued global sentiment, dragged domestic markets into negative territory,” said Vinod Nair, Head of Research, Geojit Investments.
Volatility is expected to remain elevated amid currency fluctuations and uncertainty over foreign inflows. Progress on the US–India trade deal and rupee stabilisation will be critical, while softer commodity prices and improving earnings visibility provide a constructive medium-term backdrop, Nair added.
Echoing similar views, Ajit Mishra, SVP – Research, Religare Broking, said sentiment was weighed down by the rupee breaching historic lows and crossing the 91 mark against the US dollar, amid persistent foreign outflows and uncertainty around external trade dynamics, which kept investors cautious. Lacklustre global cues further dampened risk appetite, he added.
Foreign investors flee
Foreign portfolio investors continued their selling spree and have so far in December net sold equity shares worth $1.5 billion (₹13,752 crore). With cumulative net selling of $17.7 billion (₹1.55 lakh crore) so far this year, FPIs have surpassed their record net selling seen in 2022.
Overall market breadth remained negative, with 2,523 losers against 1,654 gainers on the BSE. Due to sustained selling pressure, both the BSE Midcap and BSE Smallcap indices underperformed the benchmarks, declining 0.78% and 0.69%, respectively.
Sectorally, barring telecom and consumer durables, all other indices ended in the red. Realty, banking, commodities, IT and financial services were the top laggards, falling up to 1.36%.
Axis Bank, Eternal, HCL Tech, Bajaj Finserv and Tata Steel were the top Sensex losers, declining up to 5.03%. Shares of Axis Bank fell after Citigroup analysts cited revised expectations for a recovery in net interest margins and continued pressure on yields.
