Indian equity markets experienced a sharp decline on Tuesday, with the Sensex crashing by 873 points and the Nifty slipping below 24,700. Several factors contributed to this downturn. Moody’s downgrade of the US credit rating rattled global financial markets, triggering widespread concerns about economic stability and growth prospects.
This downgrade significantly impacted investor sentiment worldwide, including in India. Foreign Institutional Investors (FIIs) turned net sellers, pulling out significant funds from the Indian equity market. This withdrawal further exacerbated the downward pressure on the indices.
After a substantial rally in recent weeks, investors began booking profits, which led to additional selling pressure. The profit booking was a natural response to the earlier rallies, pushing prices lower. Heavyweight stocks such as HDFC Bank and Reliance Industries faced considerable selling pressure.
The decline in these stocks had a pronounced impact on the overall market, driving the indices down further.
Sensex drop triggers market concern
There were indicators of a more profound market correction emerging due to a combination of global economic concerns and domestic financial activities.
Analysts suggested that a deeper pullback could be on the horizon, leading investors to adopt a more cautious approach. Across sectors, notable declines were observed in Nifty Bank, Financial Services, and FMCG, each down by nearly 1%. The Bombay Stock Exchange (BSE) in Mumbai evidenced these trends, with men walking past a screen displaying the market results on April 7, 2025.
The mid-cap 100 index nearly erased its year-to-date losses, reflecting a balancing act between the negative impact on IT stocks and the optimistic anticipation of potential rate cuts. The benchmark BSE Sensex ended the day down by 271 points at 82,259, while the broader NSE Nifty 50 slipped 74 points to settle at 24,945. The decline was primarily driven by losses in information technology stocks following the US credit rating downgrade.
NSE data showed that among the sectoral indices, Nifty IT and Nifty Media were the top losers, while Nifty PSU Bank, Nifty Realty, and Nifty Pharma were the top gainers. Among Sensex firms, Infosys, Tata Consultancy Services, Tech Mahindra, Reliance Industries, Asian Paints, HCL Tech, and Adani Ports were the laggards. Power Grid, Bajaj Finance, NTPC, State Bank of India, and IndusInd Bank were among the gainers.
The Indian rupee rose 0.12% versus the US dollar to 85.40, hoisted by a weaker dollar, hurt by concerns over US debt and deficits following the Moody’s downgrade.
