Sensex, Nifty crash for 6th day in a row
What's the story
India's top stock market indices, Sensex and Nifty, plunged nearly 1% on Wednesday. This is their sixth straight day of losses. The fall was mainly due to fears over US tariffs and disappointing corporate earnings. Soon after opening bell, the Sensex had plummeted by 676 points or 0.9% to 75,616 while the Nifty had declined by 191 points or 0.8%, at 22,879.
Market performance
Broader markets underperform, midcap and smallcap indices decline
The broader markets also lagged behind the benchmark indices. Both BSE Midcap and BSE Smallcap indices fell 2-3%. This fall has pushed them into the bear market territory, defined by a fall of 20% from their all-time highs. The Midcap index is now down over 18% from its record high in September 2024, while the Nifty Smallcap index has fallen over 20% from its peak in December 2024.
Rate impact
US Federal Reserve's stance on interest rates influences market
In a recent Senate Banking Committee hearing, US Federal Reserve Chair Jerome Powell hinted at no hurry to cut short-term interest rates. He pointed to a "strong overall" economy with low unemployment and inflation still above the Fed's 2% target. Motilal Oswal Vice President Ruchit Jain believes this stance is already priced in. He added, "The Fed's approach is clearly data-dependent, especially with ongoing uncertainties like tariffs that could drive inflation higher."
Data anticipation
Market awaits India's inflation data amid economic slowdown
Investors are now awaiting India's inflation data, due after market close. Consumer inflation is expected to have dropped sharply to a five-month low of 4.6% in January due to slowing food price rises, a Reuters poll said. Lower inflation could give the Reserve Bank of India room to address slowing economic growth, which has weighed on corporate earnings and consumption. Jain highlighted upcoming CPI and PPI data from India and US could influence market sentiment.
Stock performance
Market pressure continues, midcap and smallcap stocks face selling
The market has been under pressure lately, with mid-cap and small-cap stocks witnessing heavy selling. "In the near term, the negative momentum is likely to persist, and any pullback will likely be sold into," Jain said. He doesn't see a major sell-off in large-cap names but continued underperformance in mid-cap and small-cap segments. "Once the quarterly results are out and the fiscal season wraps up, we'll get a clearer picture of which stocks have performed well," he added.
Trade response
India considers tariff cuts in response to US tariffs
The Nifty and Sensex lost 2% in the last two sessions after US President Donald Trump announced reciprocal tariffs on several countries, a move that could impact the world's fifth-largest economy. India is considering tariff cuts in at least a dozen sectors to boost US exports and align with domestic production goals, government officials said. Meanwhile, PM Narendra Modi is set to visit the US this week, potentially influencing trade dynamics.