The benchmark Sensex fell over 600 points, to hit the day’s low of 81,707, while the Nifty 50 dropped over 150 points to slip below the 25,200 level. Market participants shifted attention from global trade developments to domestic policy cues expected from Sunday’s budget.
On the 30-stock Sensex, declines were led by Maruti Suzuki, Bharat Electronics, Asian Paints, InterGlobe Aviation and Titan, with each stock falling roughly 2% to 2.5%.
Losses were concentrated in heavyweight financial and IT stocks, both of which slipped about 0.3%. In contrast, broader market gauges outperformed, with small-cap shares rising 0.5% and mid-caps gaining 0.2%.
Maruti Suzuki dropped as much as 3% after India’s largest automaker reported fiscal third-quarter results that showed a modest increase in profit but fell short of market expectations.
Expert views
The Nifty’s up move of 300 points during the last two days should be seen more as a temporary response in anticipation of the Budget to be presented on Sunday, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that “since the bears won’t risk going into the Budget with huge open short positions, they have covered some shorts and this has contributed to the 300 point rally in the Nifty.”
It is important to note that there is no change in the short to medium-term strategy of FIIs, which is ‘sell India’ and move the money to other performing markets, said Vijayakumar, adding that “therefore, unless there is some big announcement in the Budget nudging FIIs to return to India, they will continue to sell in India thereby dragging the market down.”
“Markets can always surprise. Some positive news/event can trigger a rally in the market. There are rumours of a sudden announcement of a US-India trade deal. If that happens close on the heels of the path breaking India-EU-trade deal, that would be a major boost to Indian economy and corporate earnings in FY27, and therefore, the market will respond positively,” said Vijayakumar.
FII/DII Tracker
On the institutional front, Foreign Institutional Investors (FIIs) bought equities worth a little over Rs 480 crore on January 28, while Domestic Institutional Investors (DIIs) were net buyers to the tune of Rs 3,360 crore.
Global Markets
Asian equity markets paused on Thursday as uneven earnings from the technology sector tempered risk appetite ahead of results from Apple, while the U.S. dollar remained under pressure despite verbal backing from U.S. and European officials.
The Federal Reserve left interest rates unchanged, as expected, with Chair Jerome Powell pointing to a “clearly improving” economic outlook and signaling broad support among policymakers for maintaining the pause.
South Korean shares fell 1.2% after a sharp run-up, though the market is still up about 21% for the month. Taiwan’s technology-heavy benchmark has climbed nearly 14% over the same period.
Japan’s Nikkei slipped 0.1%, weighed down by sharp moves in the yen and a surge in domestic bond yields. MSCI’s broad Asia-Pacific index excluding Japan declined 0.6%.
European equity futures pointed lower, with Euro Stoxx 50 and FTSE futures down 0.2% and DAX futures easing 0.1%.
Crude impact
Oil prices extended their advance for a third straight session on Thursday as fears mounted that a potential U.S. military strike on Iran could threaten crude supplies from the Middle East.
Brent crude futures gained 50 cents, or 0.7%, to $68.90 a barrel by early Asian trading, while U.S. West Texas Intermediate rose 58 cents, or 0.9%, to $63.79 a barrel.
Rupee vs Dollar
The Indian rupee fell to a fresh record low on Thursday, sliding to 91.9850 against the dollar and breaking the previous trough of 91.9650 set last week, as sustained foreign capital outflows and rising demand for currency hedges eclipsed support from a relatively strong domestic economy.
The dollar index clawed back modest ground on Wednesday but was down 0.2% at 96.12 in Thursday trading.
(with inputs from agencies)