Benchmark indices Sensex and Nifty saw a decline on Thursday, November 28, as the expiry of monthly futures and options contracts weighed on the market. The BSE Sensex dropped over 1000 points, or 1.23%, to close at 79,246, while the Nifty fell nearly 300 points, or 1.22%, trading below 24,000.
Both indices fell, with major IT stocks such as Infosys, Tata Consultancy Services (TCS), and HCL Technologies leading the losses, alongside a retreat in select index heavyweights, including Reliance Industries. However, the broader market showed more resilience, with 2,183 stocks rising, compared to 1,444 that traded lower by 12 noon.
The slump in Indian stocks came after an overnight dip in US equities, triggered by a rise in the US Personal Consumption Expenditures (PCE) inflation index, which increased to 2.8% in October. The decline in India’s key indices mirrored the weakness in major Asian markets, with markets in Taiwan, Hong Kong, China, and Korea losing up to 1.5%.
Why Are Markets Falling?
The US dollar gained strength amid geopolitical concerns, particularly with US President-elect Donald Trump announcing his intention to impose tariffs on imports from China, Mexico, and Canada. On Day 1 of his presidency, Trump plans to introduce a 25% tariff on goods from Mexico and Canada and a 10% tariff on Chinese imports.
While these tariffs may benefit India’s ‘China + 1’ trade strategy, particularly in sectors like chemicals, auto ancillaries, wires & cables, solar cells, tiles, and various US-exporting sectors, they are also contributing to a rise in the US dollar. This, in turn, could exacerbate inflation in the US and dampen the outlook for Fed rate cuts, putting further pressure on global markets.
Why is the share market falling today?
According to stock market experts, the Indian stock market is reeling under selling pressure due to the uncertainty in the global and domestic markets. They said that international investors are in limbo due to the fast approaching US Presidential Elections and rising tension in the Middle East.
DIIs are waiting for the CM name after Maharashtra State Assembly elections in the domestic market. Apart from this, they said that the Q2 results of the 2024 season have remained below market estimates while the falling Indian National Rupee (INR) has fueled buzz for the pressure on the fiscal deficit of the Indian economy.
Geopolitical tension
Due to the geopolitical tension in the Middle East, the market is unsure about the upcoming sessions. This status of uncertainty is also a reason for sharp selling in the Indian stock market
Disappointing Q2 results 2024 season
India’s Q2 2024 earnings season has underperformed, with many previously profitable companies reporting losses. Nifty earnings saw their slowest growth since June 2020, reflecting a slowdown across several sectors.
Despite these challenges, analysts remain optimistic, forecasting a recovery in the second half of the fiscal year. They expect that increased government spending and robust festival demand will drive growth in the coming months.
Maharashtra State Assembly elections 2024
The DIIs are waiting for the CM name after the Maharashtra assembly elections which mostly be Devendra Fadnavis of BJP results on why DIIs are not buying in the current Indian stock market.
After the Haryana Assembly election, this upcoming assembly election holds the key as it would signal the central government’s strength in India’s financial capital.
Weakness in Indian Rupee
The Indian rupee hit an all-time low on Thursday, November 28, trading at 84.60, as outflows from local stocks weighed on the currency. A slump in Adani group shares contributed to the decline, while uncertainty surrounding the Federal Reserve’s approach to lowering policy rates further dampened investor sentiment. The rupee rose slightly by 0.06% during the day.
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