India's equity market fell sharply on Thursday with the benchmark BSE Sensex crashing over 1,100 points intraday, and the NSE Nifty slipping below 24,500 during the session.
The market, however, recouped some of the losses during the second half of trading sessions. The Sensex lost 644.64 points to close at 80,951.99, while the Nifty was down by 203.75 points to settle at 24,609.70.
In line with the benchmark's movement, all key sectoral indices ended in the red, with FMCG, IT, and auto among the top losers. The broader midcap and smallcap indices also remained under pressure and closed with marginal losses. State-run ONGC emerged as the worst performer on the Nifty, sliding 3% after posting a 20% year-on-year decline in its Q4FY25 net profit.
The decline in the Indian market was primarily driven by weak global sentiment, particularly from the US markets. Additionally, the recent outflow of foreign institutional investors (FIIs) has weighed on sentiments.
Vinod Nair, Head of Research, Geojit Investments, said that key benchmark indices witnessed declines amid US fiscal concerns that the proposed budget bill could significantly increase the national debt, pushing US treasury yield higher due to tepid long-term bond demand.
"Adding to the pressure, a major credit rating agency's downgrade of the US credit outlook sparked broad-based selloffs across Asian markets. Despite a notable improvement in India's PMI in May and uptick in fiscal scenario, ongoing uncertainty around US-India trade negotiations and persistent global market volatility are likely to keep Indian equities in a consolidation phase in the near term," added Nair.
Rising tensions between Iran and Israel, and mixed Q4 earnings of Indian companies are also said to have hit the risk appetite of investors. Ajit Mishra – SVP, Research, Religare Broking said that going forward, it is crucial for the Nifty to hold above its 20-day EMA support near 24,450.
"A breach of this level may trigger further profit-taking, potentially dragging the index down to the 24,100 mark. We thus recommend maintaining a cautious stance and adopting a selective approach in the current environment," stated Mishra.