The Indian stock markets experienced a downturn today, with the Sensex and Nifty falling over 1%. The Sensex closed at 60,565.54, while the Nifty settled below 24,600 at 24,598.85. Market analysts attributed the decline to several factors.
One of the primary reasons was profit booking by investors following a strong rally on Monday. The markets had surged nearly 4% on reports of a ceasefire in a major geopolitical conflict, prompting investors to book profits, leading to a natural market correction. Another factor that contributed to the decline was the easing of trade tensions between the U.S. and China.
As the initial bullish sentiment started to wane, investors began reassessing stock valuations. Rising crude oil prices also added to economic concerns. Higher oil prices generally have a negative impact on the trade balance and increase inflationary pressures, which can affect market sentiment.
Sensex decline prompts investor caution
The rise in U.S. Treasury yields was another significant bearish factor for global equities. As yields increased, capital was diverted towards the bond market, making higher-risk equities less appealing.
Lastly, the decline in key index heavyweights due to valuation concerns played a role in the overall market downturn. The pullback in these major stocks had a significant impact on the indices. Financial experts continue to monitor these developments closely.
The shifting dynamics in international trade, commodity prices, and bond yields are expected to influence market performance in the near term. As Vivek Dhawan, a fund manager at Candriam in Brussels, stated, “Given how quickly things were escalating last week, the developments over the weekend are a move in the positive direction. The focus could return to the Indian growth story.”
The Indian markets are expected to open weak today, May 13, tracking signals from GIFT Nifty’s early trading around 24,918.
However, consistent with significant trading activity, Foreign Institutional Investors (FIIs) purchased equities worth Rs 1,246 crore, and Domestic Institutional Investors (DIIs) bought shares worth Rs 1,488 crore on May 13.
Image Credits: Photo by Markus Spiske on Unsplash
