Indian Stock Market Slumps Amid Global and Domestic Concerns

The Indian stock market commenced Wednesday's session on a subdued note, stretching its streak of negative returns to a full year. The Nifty 50 index began the day at 25,108.75, down by 60.75 points or 0.24%, while the BSE Sensex dropped 184.45 points or 0.22% to start at 81,917.65, as a combination of global and domestic challenges weighed on investor sentiment.

Market analysts cited the overshadowing of the momentum from recent GST rate cuts by escalating concerns over the H1B visa situation, which is also perceived as a hindrance to improving India-US trade dynamics. Ajay Bagga, a Banking and Market Expert, mentioned to ANI, "Asian markets are weak this morning, and Indian markets are similarly showing signs of a weak start. The impetus from the GST rate cuts is being countered by US tariff concerns and H1B visa complications. Strong FPI selling continues alongside promoter and PE-VC sales, which, coupled with a robust primary issuance pipeline, is draining liquidity from secondary markets. Today marks 12 continuous months of negative returns in Indian markets. Historically, markets tend to outperform after such prolonged underperformance, but that recovery is anticipated only when corporate earnings growth rebounds, expected in the next one or two quarters."

Broader market indices revealed a mixed pattern. The Nifty 100 and Nifty Midcap 100 indices opened negatively, whereas the Nifty Smallcap 100 showed a slight increase of 0.05%. Sectoral indices experienced selling pressure in most areas. Nifty Auto edged down 0.02%, Nifty IT fell 0.31%, and Nifty Private Bank dipped 0.31%. However, Nifty Media, Nifty PSU Bank, and Nifty FMCG managed minor gains of 0.08% each. Vikram Kasat, Head Advisory at PL Capital, commented, "There is a tug of war between the bulls and the bears. Nifty is trading below crucial hourly averages. The levels of 25,262 as a high and 25,084 as a low from yesterday are key to watch. A decisive break through this range could clarify the trend, and the overall outlook suggests an upside break. However, confirmation is awaited."

Globally, markets also witnessed a downturn. US markets closed softer following remarks from Federal Reserve Chair Jerome Powell, who mentioned that the Fed may cautiously adjust interest rates as it contends with balancing risk factors in a slowing market amid persistent inflationary pressure. Powell stated, "Near-term risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation. Two-sided risks mean that there is no risk-free path."

Coupled with domestic challenges like persistent FPI selling and global uncertainties, Indian equities are experiencing heightened volatility. Investors are now keenly observing upcoming corporate earnings data, which could potentially act as a catalyst for market recovery.

(With inputs from agencies.)