Despite the Reserve Bank of India’s (RBI) rate cut and the Bharatiya Janata Party’s (BJP) victory in the Delhi elections, stock markets experienced a steep decline in early trading on Monday. As selling pressure grew, the benchmark indices began the day down and kept falling.
In early trading, the NSE Nifty fell about 200 points, and the BSE Sensex shed more than 600 points. After ending at 77,860.19 in the previous session, the Sensex dropped to its lowest point of the day, 77,189.04. The Nifty50 fell 177.90 points to 23,382.05. The Sensex fell 579.15 points to 77,281.04 as of 10:30 AM. The selloff was caused by a number of causes, according to market experts.
The market is under more pressure as a result of foreign investors continuing to sell their holdings, according to Kranthi Bathini, Director of Equity Strategy at WealthMills Securities. “Indian markets are witnessing selling pressure from foreign portfolio investors. After the rate cut and also, the recent budget, it’s not able to enthuse the foreign portfolio investors. They continued to be the sellers. One thing is the earning traction, okay, that has been missing in the markets in the medium to short term. That’s creating pressure on Indian markets. As long as Nifty is about 23,000, the medium to short term direction is in a positive direction,” said Bathini.
Due to regional currency losses brought on by worries about possible U.S. trade penalties, the rupee fell to a record low on Monday. Traders told that the RBI may step in to stabilise the currency if needed.
The rupee fell to 87.95 against the US dollar in early trading, breaking its previous record low of 87.58 from the previous week. It was down 0.6% for the day at 87.93 as of the most recent report. A declining rupee impacts sentiment toward foreign investment and raises the price of imports, especially crude oil. According to analysts, the RBI could need to take additional measures to stabilize the rupee if the trend persists.
Following US President Donald Trump’s announcement of increased tariffs on imports of steel and aluminum, metal stocks were among the poorest performers. Speaking to reporters aboard Air Force One, Trump stated that in addition to current levies, all imports of steel and aluminum would be subject to the new 25% tariffs. He stated that tariffs would take effect virtually immediately after the official announcement, which is scheduled for Monday. The news led to a sharp selloff in metal stocks in India. The Nifty Metal index dropped 2.94%, with major companies witnessing steep declines.
Steel Authority of India (SAIL) saw a 4.16% decline, while Vedanta Limited saw a 4.61% decline. JSW Steel fell 3.04 percent, and Tata Steel fell 3.48%. Jindal Steel & Power decreased 2.35%, NMDC down 2.88%, and National Aluminum Company sank 2.90%. Fears of decreased demand and pricing pressure as a result of the new tariffs were reflected in the overall reduction in metal stockpiles.
Although some market sentiment stabilization was anticipated following the recent Delhi election results, the impact has been outweighed by international concerns and offshore investment activity. Analysts at Motilal Oswal Financial Services (MOFSL) noted that the BJP’s victory in Delhi should be a positive sign for markets, as it eases concerns about political stability at the Centre.
After a 27-year break in control of the state, the BJP won 48 of 70 seats in the Delhi Assembly elections. The victory was credited by MOFSL to Prime Minister Narendra Modi’s leadership, the party’s campaign emphasis on “double-engine” governance, and a potent anti-incumbency sentiment against the Aam Aadmi Party (AAP). MOFSL thinks that the market will now focus on corporate results, company outlook, and global economic trends, even if this outcome is anticipated to increase confidence. In the days ahead, the market may continue to be impacted by selling by foreign investors and uncertainty around U.S. trade policies.
