Investors on Dalal Street continued to encounter turbulence on Monday as the benchmark indices Sensex and Nifty50 fell for the fourth straight trading session.
By 1:01 pm, the Sensex had dropped 744.23 points to 76,634.67, after hitting an intraday low of 76,535.24. Meanwhile, the Nifty50 also tumbled 246.80 points to 23,184.70.
A stronger-than-expected US jobs report, coupled with concerns over global economic conditions, triggered the selling pressure.
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Here are three key factors that investors should be aware of as the stock market faces ongoing volatility.
WHY IS THE STOCK MARKET FALLING?
The recent US nonfarm payrolls report showed the addition of 256,000 jobs in December, surpassing expectations of 160,000.
The fresh data has reduced the likelihood of multiple rate cuts by the US Federal Reserve in 2025, further strengthening the dollar and weighing on emerging market currencies.
Moreover, the dollar index neared 110, while the rupee plunged to a record low of 86.39, raising fears of continued foreign outflows.
FII OUTFLOWS CONTINUE
Foreign institutional investors (FIIs) have pulled over $4 billion from Indian equities this month, following an $11 billion outflow in the last quarter.
Concerns over US monetary policy and uncertainty about President-elect Donald Trump’s economic strategies have intensified bearish sentiment.
Additionally, Brent Crude’s rise to over $81 per barrel has increased inflationary concerns, adding to market jitters.
MORE PAIN AHEAD FOR INVESTORS?
Experts suggested that volatility will persist in the near term and that stock markets could fall further.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Market will continue to be under pressure from the many strong headwinds.”
“The blow out jobs data from the US with 2.56 lakh job creation in December against expectations of 1.65 lakhs means the rate cut expectations in 2025 is now down to one. With the unemployment in the US down to 4.1% the economy doesn’t need any stimulus. This good economic news is turning out to be bad news for markets which were discounting many rate cuts this year,” he added.
Vijayakumar added that Brent Crude price rising to $81 is also a concern for India, and it seems to have weighed on market sentiments.
Meanwhile, Emkay Global has stated in a note that domestic markets might remain weak until March, with stability expected from April as earnings outlooks improve and FII selling subsides.
The brokerage set a conservative Nifty target of 25,000 for 2025, projecting small and mid-cap stocks to outperform. “We see another year of moderate returns for the Nifty, but SMIDs could deliver stronger gains,” the note added.
ICICI Securities expressed similar concerns, suggesting that anxiety around Donald Trump’s policies and Budget 2025 could keep markets on edge.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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