Indian Stock Markets Tumble, Log Weekly Losses Amid Global and Domestic Uncertainty

Auto, pharma, PSU bank sectors lead the decline; upcoming Union Budget and global factors in focus

New Delhi, January 24: Indian stock indices slumped on Friday, capping off a volatile week with sharp losses across multiple sectors. The Sensex closed at 76,190.46 points, down 329.92 points (0.43%), while the Nifty settled at 23,092.20 points, declining by 113.15 points (0.49%).

Sectoral indices including auto, pharma, PSU banks, realty, media, and oil and gas took significant hits, reflecting the broader market weakness. Data from the National Stock Exchange (NSE) highlighted underperformance in midcap and small-cap stocks relative to their larger peers.

Key Factors Behind the Market Decline

1. Global Uncertainty:
   Investors remain cautious amid speculation over US President Donald Trump’s policies and potential disruptions to global trade.
2. Domestic Economic Concerns:
   Sluggish GDP growth, high food prices, and weak consumption trends are weighing heavily on market sentiment.
3. FII Outflows:
   Foreign institutional investors (FIIs) have continued to sell off Indian equities, exerting additional pressure on the markets.

“FIIs will likely continue to sell, impacting large-cap stocks like banking. There’s an irrationality in the market right now, with low valuations for large caps and excessive valuations for midcaps. However, a correction is inevitable, though the timing is uncertain,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Sectoral Performance and Market Trends

The BSE realty index witnessed sharp corrections, while IT emerged as an outlier with strong performance amid the broader market decline. IT stocks gained momentum following positive Q3 results and optimistic management commentary.

“The Q3 results for IT companies indicate improving prospects for the sector, making it a safer bet in this uncertain market,” added Vijayakumar.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that ongoing global and domestic factors, including the upcoming Union Budget and RBI’s policy decisions, would significantly shape market movements in the coming weeks.

Market Outlook

The Indian equity markets underperformed relative to global peers, recording a 3% decline in January 2025. This follows moderate growth of 9-10% in 2024 and 16-17% gains in 2023.

Looking ahead, market participants will closely monitor the Union Budget 2025 for key announcements that could influence market dynamics.

Conclusion:
While Indian stock markets grapple with volatility, strategic sectors like IT and global macroeconomic trends will remain critical in steering investor confidence. The upcoming Budget session will play a pivotal role in shaping market sentiment and determining future growth trajectories.