Sensex Tumbles Nearly 800 Points: Key Drivers Behind Market Decline

Indian stock markets faced a significant downturn on Thursday, with the Sensex plunging 769.60 points to 79,464.48 and the Nifty50 falling 221.15 points to 24,053.75 by 11:36 am. Despite ongoing gains in Adani Group stocks, global uncertainties and sectoral weaknesses triggered a broad-based sell-off.

Here are four primary factors influencing the market turbulence:

1. US Inflation Data and Interest Rate Concerns

Stronger-than-expected U.S. consumer spending data for October has sparked fears of a slower pace of Federal Reserve rate cuts. While there is a 65% probability of a December rate cut, doubts about further easing in 2025 are unsettling global markets. This has dampened investor sentiment, with the MSCI Asia-Pacific Index (excluding Japan) dipping 0.07%.

• Mandar Bhojane, Research Analyst at Choice Broking, stated, “The uncertain global environment directly impacts sectors like IT and pharma, which are reliant on exports.”

2. Sectoral Weakness in IT and Auto

IT and auto stocks led the market downturn. Heavyweights like TCS, Power Grid, and M&M experienced sharp losses. The Nifty IT index fell over 2%, with Infosys, HCL Tech, and Tech Mahindra shedding up to 3%.

• Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Overseas exposure is driving weakness in IT. This consolidation phase may persist unless foreign institutional investors (FIIs) resume aggressive buying.”

3. Currency and Crude Oil Volatility

The Indian rupee weakened by 6 paise to 84.46 against the U.S. dollar, signaling emerging market pressure from a stronger dollar. Crude oil prices also added to concerns, with Brent crude trading at $72.79 per barrel. A rise in U.S. gasoline stocks ahead of Thanksgiving heightened worries over global demand.

4. Persistent FII Selling

While domestic institutional investors (DIIs) purchased net equities worth ₹1,301 crore on Wednesday, continued FII outflows weighed on market sentiment. Analysts suggest that the Nifty50 could face immediate support at 24,000, with resistance at 24,400, which might limit short-term recovery.

• Bhojane noted, “A breakout above 24,400 could provide momentum, but the index remains in a narrow trading range.”

Investors are closely monitoring both global and domestic developments to navigate the market’s trajectory in the days ahead.

(Disclaimer: The views and opinions expressed are those of individual analysts and do not reflect the stance of this publication. It is advisable to consult a financial advisor before making any investment decisions.)