The Indian stock market witnessed a sharp decline on Friday, with the Sensex and Nifty closing 1.1-1.2 per cent lower at 80,981.95 points and 24,717.70 points, respectively. Analysts attributed this fall to a sell-off in the US markets, triggered by weak US manufacturing activity and concerns of a slowing economy. Additionally, profit booking was observed in the broader market following a recent bull run. Vinod Nair, Head of Research at Geojit Financial Services, noted that the lack of new triggers for upward movement, along with lackluster Q1FY25 earnings and high market valuations, contributed to the sell-off.
Despite the US Fed suggesting a rate cut in September, global markets have already priced in this move, leading to consolidation in the markets. Looking ahead, Joseph Thomas, Head of Research at Emkay Wealth Management, highlighted that growth data and geopolitical escalations, as well as stock-specific earnings outcomes and the RBI policy decision, will be key factors influencing the markets in the coming days. This shift in market sentiment comes after both Nifty and Sensex achieved record highs on Thursday, supported by the US Federal Reserve’s decision to maintain unchanged interest rates for the eighth consecutive time.
The recent market performance has been driven by a variety of factors, including robust GDP growth, controlled inflation, strong domestic liquidity, and favourable monsoon conditions. The Nifty 50 index hit the 25,000 mark for the first time on Thursday, marking a significant milestone for the National Stock Exchange (NSE). However, on Friday, the index fell slightly below this level. The journey from hitting the 20,000 mark on September 11, 2023, to reaching 25,000 took 221 trading days, showcasing the index’s consistent growth over time.
NSE MD and CEO Ashishkumar Chauhan attributed the recent market rally to the budget for the financial year 2024-25, which has instilled confidence in the economy and led investors to bet on growth opportunities in India. Chauhan highlighted that upcoming events such as the RBI interest rate declaration and the Federal Reserve interest rate decision will serve as key triggers for the market. Additionally, India’s status as the fastest growing large economy in the world and its strong economic fundamentals are expected to drive continued investor interest in the market.
In conclusion, while the Indian stock market experienced a sharp decline on Friday, driven by global cues and profit booking, the overall outlook remains positive due to strong economic fundamentals and growth prospects. Investors are closely monitoring upcoming events and data releases, such as earnings outcomes and central bank decisions, to gauge the market direction in the coming days. The recent milestones achieved by both Nifty and Sensex reflect investor confidence in the Indian economy and its potential for further growth in the future.
