Opening Trade Sees Significant Drops

The Indian equity benchmark indices, BSE Sensex and Nifty50, experienced a sharp decline in opening trade on Thursday, influenced by the US Federal Reserve's recent hawkish commentary. BSE Sensex dropped below 80,000, while Nifty50 plunged below 24,000. By 9:17 AM, BSE Sensex was trading at 79,287.77, down 894 points or 1.12%, and Nifty50 was at 23,917.00, down 282 points or 1.16%.

The Indian market's decline is part of a broader trend influenced by the US Federal Reserve's decision to reduce interest rates by 0.25% and indicate a more conservative approach to future rate reductions. This has led to significant losses in US indices, with all three major indices recording their largest single-day losses in months. The impact on Asian equities was immediate, with Thursday witnessing a fall in Asian markets following the US market losses.

Market sentiment remains cautious ahead of potential policy and tariff shifts from the incoming US administration, further influenced by India's premium valuation, which is significantly above the current earnings growth trajectory. Foreign portfolio investors have shifted to a net selling position, with outflows of Rs 1,316 crore on Wednesday, while domestic institutional investors offloaded equities valued at Rs 4084 crore.

The dollar approached a two-year high following the Federal Reserve's indication of reduced rate cuts in 2025, while the yen decreased to its lowest point in a month ahead of the Bank of Japan's (BOJ) policy announcement. Gold prices remained near their lowest point in a month as the US Federal Reserve suggested a deceleration in monetary policy easing for the next year, strengthening both the dollar and Treasury yields.