Stock Market Today: Nifty50 Dips Below 24,650; BSE Sensex Falls Over 600 Points

On Thursday morning, Indian equity markets opened in the red with benchmark indices showing significant declines. The Nifty50 slipped below the 24,650 mark, trading at 24,617.15 by 9:21 AM, down 196 points or 0.79%. Meanwhile, the BSE Sensex dropped over 600 points to 80,971.45, down 625 points or 0.77%.

Despite the early losses, market analysts remain cautiously optimistic about near-term stability, supported by strong domestic economic indicators, healthy corporate earnings, and forecasts of above-average rainfall this season.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out a slight “risk off” sentiment in global markets, driven by growing concerns over the unsustainable US fiscal deficit. He highlighted rising yields on US Treasury bonds and weakening confidence in US debt, noting that similar trends are emerging in Japan. However, Vijayakumar also mentioned that this scenario could redirect capital flows towards emerging markets with better growth and earnings prospects, especially companies focused on domestic consumption. Recent strong quarterly results from Interglobe Aviation and Bharti Airtel support this view.

Globally, US equities ended sharply lower on Wednesday amid worries about escalating government debt following proposed tax cuts. Asian markets also declined on Thursday morning, continuing the negative sentiment. Gold prices rose as investors sought safe havens amid uncertainty about US debt and weak interest in longer-term Treasury bonds. Conversely, oil prices fell due to unexpected rises in US crude and fuel inventories, alongside cautious sentiment surrounding renewed nuclear talks between Iran and the US.

In terms of market activity, foreign portfolio investors bought shares worth a net Rs 2,202 crore on Wednesday, while domestic institutional investors also remained net buyers with Rs 684 crore worth of purchases.

The main reasons for the Nifty50 dipping below 24,650 and the BSE Sensex falling over 600 points are:

1. Global Market Risk-Off Sentiment

   • Concerns about the unsustainable US fiscal deficit and rising US Treasury bond yields have created uncertainty, leading investors to move away from riskier assets.

2. Weak US Treasury Bond Auction

   • Poor demand for long-term US bonds and rising yields indicate declining confidence in US debt, which typically pressures emerging markets like India.

3. US Government Debt Concerns

   • Fears of increasing government debt following proposed tax cuts have heightened market worries, affecting investor sentiment globally.

4. Decline in Asian Equities

   • Negative trends in Asian markets following US losses have contributed to pressure on Indian indices.

5. Cautious Oil Market

   • Unexpected rises in US crude and fuel inventories signal weaker demand, which adds to overall market caution.

6. Shift Toward Safe-Haven Assets

   • Increased buying in gold and Bitcoin suggests investors are seeking safer options, reducing flows into equities.

In this situation where Nifty50 and BSE Sensex are showing notable declines amid global uncertainties, here are some steps investors might consider:

What Investors Should Do:

1. Stay Calm and Avoid Panic Selling

   • Market dips are often temporary. Avoid making impulsive decisions based on short-term volatility.

2. Focus on Quality Stocks

   • Invest or hold stocks of companies with strong fundamentals, especially those driven by domestic consumption, as these are likely to perform better despite global headwinds.

3. Diversify Your Portfolio

   • Spread investments across sectors and asset classes (equities, gold, debt) to reduce risk exposure.

4. Monitor Macroeconomic Trends

   • Keep an eye on domestic economic indicators and corporate earnings, which remain robust and can support market stability.

5. Consider Safe-Haven Assets

   • Allocating a portion of the portfolio to assets like gold or stable bonds can provide protection during uncertain times.

6. Use Dips as Buying Opportunities

   • If financially comfortable and aligned with long-term goals, consider gradually buying quality stocks at lower prices.

7. Stay Updated but Avoid Overtrading

   • Follow market news and expert insights but avoid excessive trading, which can erode returns.

Disclaimer: The views expressed by experts in this article are their own and do not necessarily represent the opinions of The Times of India.