Winter sale continues: It's back to summer of '24 for D Street

Mumbai: India's equity indices slumped nearly 1.5% on Monday to their lowest closing in seven months, tracking Friday's selloff on Wall Street and further run-up in US bond yields along with the dollar after a hot US jobs report dashed investor hopes of rate cuts by the Federal Reserve.

The panic in equities was sharper in the broader market with mid-cap and small-cap indices tumbling nearly 4% each. Analysts said the markets are oversold but the undertone is cautious ahead of Donald Trump taking charge as US President on January 20.

The NSE Nifty fell 1.5%, or 345.55 points, to close at 23,085.95. The BSE Sensex plunged 1.4%, or 1,048.9 points, to close at 76,330. Both indices ended at the lowest closing level since June 6.


The selloff led to a market cap erosion of ₹13 lakh crore.

"The strong US jobs data tempered expectations of an interest rate cut by the US Federal Reserve, while the rupee is hitting a lifetime low because of the consistent foreign selling that is leading to high demand for the dollar," said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.

“The weak market setup and weak pre-quarterly updates are contributing to the sharp corrections,” Khemka said. With the rupee tumbling to fresh lows against the dollar, overseas investors stepped up their selling of domestic stocks with foreign portfolio investors (FPIs) dumping shares worth Rs 4,893 crore on Monday, taking their sales tally for 2025 to Rs 24,000 crore.

The wall of domestic flows worth Rs 8,066.07 crore on Monday only partly helped cushion the slide. The rupee depreciated to a lifetime low of 86.58 against the dollar on Monday.

The yield on US 10-year bonds rose to 4.79%, the highest since November 2023 while the dollar index neared 110, extending its winning run. Both indices fell almost 2.5% in the last five trading sessions. The risk-off sentiment has led to market cap erosion by around Rs 25 lakh crore. “Investors are likely to be cautious and take money off the table ahead of Trump taking office, RBI (monetary) policy and the budget,” said Nilesh Jain, head of derivatives and technical research, Centrum Broking.

The budget is on February 1 and the policy announcement on February 7. He expects the Nifty to be at 22,500 to 22,000 levels in the near term.