Market Turmoil: Sensex and Nifty Plunge as Investors Cash Out Ahead of Fed Decision

Market Overview

Mumbai: The equity markets faced a significant downturn on Monday, with the Sensex and Nifty indices dropping sharply after two days of gains. Investors opted to secure profits amidst ongoing stock sell-offs by foreign investors.

Market analysts noted that the sentiment was further dampened as investors adopted a cautious stance ahead of the upcoming US Federal Reserve policy announcement.

The BSE Sensex fell by 609.68 points, or 0.71%, closing at 85,102.69. At one point during the day, it had dropped by 836.78 points, reaching an intraday low of 84,875.59.

Similarly, the NSE Nifty index saw a decline of 225.90 points, or 0.86%, settling at 25,960.55, with an intraday low of 25,892.25 after a drop of 294.2 points, or 1.12%.

Among the stocks that contributed to the decline were Bharat Electronics Ltd, Eternal, Trent, Tata Steel, Bajaj Finance, Adani Ports, Bajaj Finserv, State Bank of India, PowerGrid, Asian Paints, Tata Motors Passenger Vehicles, Titan, NTPC, Kotak Mahindra Bank, Larsen & Toubro, and Bharti Airtel.

In contrast, Tech Mahindra, HCL Technologies, Reliance Industries, and HDFC Bank were the few stocks that managed to gain.

"The market saw a widespread decline, dipping below the 26,000 mark as investors grew wary ahead of the Fed's policy decision this week," stated Vinod Nair, Head of Research at Geojit Investments Ltd.

He further explained that despite strong domestic growth indicators and a recent rate cut by the RBI, short-term market sentiment is clouded by global monetary policy uncertainties, ongoing foreign institutional investor outflows, and currency depreciation.

Nair also mentioned that volatility was heightened by a rise in Japanese bond yields to multi-year highs, raising concerns about a potential unwinding of the yen carry trade.

In other Asian markets, most closed positively, with South Korea's KOSPI up by 1.34%, Shanghai's SSE Composite index increasing by 0.54%, and Japan's Nikkei 225 rising by 0.13%. However, Hong Kong's Hang Seng index fell by 1.23%.

European markets displayed mixed trading patterns, while Wall Street had a positive close on Friday.

On the foreign investment front, foreign institutional investors sold equities worth Rs 438.90 crore on Friday, while domestic institutional investors purchased stocks worth Rs 4,189.17 crore, according to exchange data.

Brent crude oil prices decreased by 0.61% to USD 63.37 per barrel.

On Friday, the BSE Sensex had gained 447.05 points, closing at 85,712.37, while the NSE Nifty rose by 152.70 points to finish at 26,186.45.