Bears Continue to Rule: Indian Stock Markets Witness Sharp Decline

Indian stock markets opened on a weak note, with major indices falling significantly due to a strong US Dollar, rising global bond yields, and uncertainty over possible Trump 2.0 policies. Market experts are cautiously optimistic, hoping upcoming US corporate earnings might counter the prevailing pessimism impacting global and Indian equities.

Indian stock markets extended their downward trajectory on Monday, as bears dominated the opening session. The Nifty 50 index saw a significant drop, losing over 1% or 236.10 points, starting at 23,195.40. Similarly, the BSE Sensex recorded a decline of 749.01 points or 0.97%, opening at 76,629.90.

According to market specialists, the fall is linked to a resilient US Dollar and escalating global bond yields, both impacting global equities. Additionally, uncertainty regarding potential Trump 2.0 policies has fuelled a 'sell now, think later' sentiment. However, experts remain hopeful this pessimism will wane as strong US corporate earnings are forecasted to begin from January 15. Ajay Bagga, a banking and market expert, informed ANI that the Foreign Portfolio Investment (FPI) short positions are nearing levels seen in previous market troughs. Yet, he cautioned that a singular figure does not guarantee market stabilization.

Bagga further mentioned that the main focus currently is on rising global yields and the implications of Trump's policies on inflation and debt levels. Despite these challenges, he remains optimistic that the markets will adjust to the new data and advance forward. On the NSE, sectoral performances showed a downward trend, with Nifty FMCG and Nifty Consumer Durables dropping over 1% in early trading and other indices also opening negatively. Nifty IT decreased by 0.5%, while Nifty Bank and Auto fell by 0.9%.

Concerns about increasing global inflation, debt, and higher oil prices due to new sanctions on Russian entities by the outgoing Biden administration have complicated the stock market environment both globally and in India. Attention now turns to whether strong US corporate earnings can uplift the negative market sentiment or if a prolonged downturn lies ahead.

Of the Nifty 50 stocks, 49 opened with losses, with IndusInd Bank being the sole stock to open in the green. The top losers included BPCL, BEL, Power Grid, NTPC, and Trent. Akshay Chinchalkar, Head of Research at Axis Securities, pointed out that the area between 23177 and 23355 remains significant for downward movement, with immediate resistance at 23600. Even though the percentage of stocks above the 200-day average in the Nifty has dropped to 34, the 14-day momentum hasn't reached oversold territory, suggesting further weakness may be expected. Chinchalkar emphasized monitoring 23238, a critical downside point, throughout the day.

Other Asian markets followed the negative trend, with Taiwan Weighted dropping over 2%, South Korea's KOSPI falling by 1.18%, and Hong Kong's Hang Seng declining by 1.32%. The Japanese Nikkei was closed for a holiday. At the time of this report, most Asian markets remained under pressure.

(With inputs from agencies.)