Mumbai: The Indian equity markets experienced a sharp decline on Thursday, with the SENSEX plummeting 395 points and the NIFTY50 index dropping below 25,850. The decline was led by significant losses in major index heavyweights, including Infosys, Tata Consultancy Services, HDFC Bank, and Mahindra & Mahindra.
As of 9:29 am, the SENSEX had fallen 391 points to 83,843, while the NIFTY50 index had dropped 128 points to 25,828. The losses in these key stocks dragged the entire market down, ahead of the weekly expiry of SENSEX futures and option contracts.
The sharp decline in the Indian markets was a departure from the positive trend seen in Asian stocks, which surged to a new record high. The strong gains in the Asian markets were driven by optimism about the global economic recovery and the prospects of a stimulus package in the United States.
Despite the decline, market analysts remain cautious, citing concerns about the ongoing spread of the COVID-19 virus and the impact on global trade. “The market is likely to remain volatile in the short term, with a focus on the government’s response to the pandemic and the impact on the economy,” said a leading market analyst.
The decline in the Indian markets was also exacerbated by the weak performance of the IT sector, which has been a major driver of the market’s growth in recent years. The sector is facing increased competition from emerging markets and a slowdown in demand from the US, a key market for Indian IT companies.
Meanwhile, the Reserve Bank of India (RBI) is expected to hold its next monetary policy meeting later this month, with the market watching closely for any potential changes to interest rates or other policy measures.
The sharp decline in the Indian markets has also been attributed to the weak performance of the currency, with the rupee falling to a new low against the US dollar. The weak currency has made imports more expensive and has increased the cost of production for Indian companies, further exacerbating the decline in the markets.
As the market continues to grapple with these challenges, investors are advised to remain cautious and to closely monitor the situation. “It’s a time for risk management and not for taking aggressive bets on the market,” said a leading broker.