Sensex falls over 600 points: Why is stock market down today? 3 key reasons
Benchmark stock market indices tanked in early trade on Monday extending their downward momentum and continued to be under pressure, led by a decline in auto, banking and metal sector stocks.
The S&P BSE Sensex was down by 657.97 points to 76,720.94, while the NSE Nifty50 fell 199.60 points to 23,231.90 as of 9:20 AM.
IndusInd Bank emerged as the top gainer on Nifty50 in early trade, rising by 3.09%, while Shriram Finance moved up by 0.27%. Oil and Natural Gas Corporation (ONGC) gained 0.25%, followed by Britannia Industries with a 0.12% increase, and Axis Bank which edged up by 0.10%.
On the losing side, Bharat Petroleum Corporation Limited (BPCL) led the declines with a drop of 2.38%, while Apollo Hospitals Enterprise fell 1.93%. SBI Life Insurance Company declined by 1.90%, followed by Mahindra & Mahindra which slipped 1.77%. Wipro rounded out the major losers with a decline of 1.61%.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that market will continue to be under pressure from the many strong headwinds.
KEY REASONS FOR STOCK MARKET FALL
Rupee hits a record low – The Indian rupee crashed 23 paise to a historic low of 86.27 against the US dollar in early trade. This drop came after stronger-than-expected US jobs data dampened hopes for significant interest rate cuts by the Federal Reserve in 2025.
The rupee opened at 86.2050 against Friday’s close of 85.9650. A weak rupee increases import costs, particularly for crude oil, and adds to inflationary pressures in the economy.
US jobs data and rate concerns – The US added 2.56 lakh jobs in December, far exceeding expectations of 1.65 lakh. This pushed the US unemployment rate down to 4.1%. While this highlights a strong US economy, it has led to reduced expectations of rate cuts by the Federal Reserve.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “The robust US jobs data means the Fed is unlikely to cut rates significantly this year. This good economic news for the US is turning out to be bad news for global markets, including India, which were hoping for rate cuts to boost liquidity.”
Rising crude oil prices – Brent crude prices rose to $81 per barrel, creating concerns for India, a major importer of crude oil. Higher crude prices increase input costs for businesses and could lead to higher inflation, adding to the challenges for the Indian economy.
Analysts suggest that while the near-term outlook remains challenging, there could be opportunities for long-term investors.
Anand James, Chief Market Strategist at Geojit Financial Services, said, “The market is approaching critical levels, with Nifty near its recent low of 23,263. A break below this level could see the index falling to 23,000 or even 22,260. However, any recovery above 23,540 could signal strength and give bulls a chance to regroup.”
Dr Vijayakumar added that the strength of the US economy could support IT stocks, which have been relatively resilient. He also said that healthcare and pharma sectors may remain stable due to steady demand.