The Indian stock market saw a surge in bloodshed on January 13, as the Sensex shed 1,049 points (1.36 percent) to close at 76,330.01, while the Nifty 50 shed 346 points (1.47 percent) to end at 23,085.95. With a staggering loss of Rs 13 lakh crore in market capitalization, the total wealth of BSE-listed companies fell to Rs 417 lakh crore.
The mid-cap and small-cap segments bore the brunt, with indices falling 4 percent each, increasing sell-off sentiment across sectors. Nifty Realty, Media, Consumer Durables, and PSU Bank were among the worst-hit indices, recording declines of between 3 and 6.5 percent.
Eight factors that fuel the decline
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Crude oil spikes: Oil prices rose above $80 a barrel, boosted by US sanctions on Russian energy exports. The ripple effect has weighed on India’s financial health and investor sentiment.
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Rupee at record low: The rupee touched 86.61 against the dollar, further buoyed by a strong US dollar and increased global risk aversion.
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Trump’s policy uncertainty: Speculation about possible trade tariffs under the incoming administration of Donald Trump has rattled markets.
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FPI Issue: Foreign investors exited Indian equities worth Rs 21,350 crore in January alone, driven by stretched valuations and fears of global tightening.
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Budget conditions: Concerns over the populist Union Budget 2025 have dampened market confidence, as fiscal prudence remains a top priority.
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US Fed fears of rate hike: Strong US economic data and higher bond yields ended hopes of an imminent Fed rate cut, weighing on emerging markets.
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Q3 revenue down: With Q1 and Q2 earnings already lacking, Q3 is expected to follow suit, adding to the bearish outlook.
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Reducing GDP growth: India’s GDP is expected to grow by 6.4 percent, marking a sharp decline from last year’s 8.2 percent. This raised concerns about the sustainability of the rating.
What are we still to do? Investors remain cautious as the situation escalates. Analysts suggest closely monitoring crude oil trends, foreign flows, and upcoming Q3 earnings to gauge the market’s trajectory. Meanwhile, the steep correction provides a stark reminder of the risks in global and domestic markets.
