A huge fall was seen in the stock market on Thursday. Sensex fell 592.67 points or 0.70% to close at 84,404.46 due to weakness in key sectors. Nifty also fell 176.05 points or 0.68% to close at 25,877.85. Nifty Bank index also fell 0.61% to close at 58,031. Due to this fall, investors lost ₹3 lakh crore in a single day. The market capitalization of BSE declined by ₹3 lakh crore to ₹472 lakh crore.
This fall in the stock market has come after the US Federal Reserve announced a cut in interest rates. Yesterday, the Fed announced a 25 basis point cut in interest rates. Vinod Nair, head of research at Geojit Investments, said that Federal Reserve Chairman Powell has indicated that this could be the last interest rate cut till 2025. This statement has reduced hopes for further relief. This strengthened the US dollar, causing a decline in the stock markets of many countries including India.
Mixed performance of stocks
Despite the weakness in the market, some stocks performed well. Larsen & Toubro (L&T) and Bharat Electronics (BEL) were the top gainers of the day. Apart from this, shares like UltraTech Cement, Maruti Suzuki, Tata Motors Passenger Vehicles (TMPV) and Adani Ports also witnessed gains. On the other hand, shares of Bharti Airtel, Power Grid, Tech Mahindra, Infosys and Reliance Industries witnessed the biggest decline.
1. China-US agreement not finalized yet!
US President Donald Trump and Chinese President Xi Jinping met. Some business discussions took place during this meeting. Trump described the meeting as “wonderful” and said that it had resolved many issues. However, investors remained skeptical. The first official statement issued by China indicates that no agreement has been finalized yet.
2. Rupee under pressure
The much-awaited US-China trade deal failed to reassure investors, putting pressure on Asian currencies. According to market observers, currency traders are particularly skeptical about Trump’s change in stance. They fear he could soon resume threats of tariffs and encourage risk aversion. Due to this the rupee fell further against the US dollar.
3. Pressure on pharma stocks
Pharma shares fell heavily in today’s trading. Dr Reddy’s shares fell nearly 5% to a record low. This happened because the Pharmaceutical Drugs Administration of Canada issued a non-compliance notice for its ANDS (abbreviated new drug submission) for semaglutide injection. The notice sought clarification on specific parts of the presentation.
4. Profit booking in stock market
Profit booking was seen in the stock market today. This happened as the Sensex and Nifty had gained more than 5% this month, and both the indices were very close to their record levels. Analysts believe that this is the reason why investors decided to book profits.
5. Mixed signals from Asian markets
After meeting with Xi Jinping, Trump reduced tariffs on Chinese goods from 57% to 47%. Despite this, Asian markets remained sluggish. Although the US reduced tariffs on China and cut interest rates, Asian markets were still sluggish. China’s Shanghai Composite was down 0.7%. Hong Kong’s Hang Seng, Singapore’s Straits Times and Singapore benchmark indexes fell about 0.3% each. Meanwhile, Japan’s Nikkei and South Korea’s Kospi rose 0.3% on Thursday.
