Sensex Crashes Over 700 Points, Nifty Slips Below 24,600 Amid Global Market Rout

Equity markets in India witnessed a sharp correction on Thursday, with benchmark indices plunging more than 1% in early trade. The sell-off was primarily driven by a surge in US bond yields and renewed concerns over America’s fiscal health, which sparked widespread risk aversion across global markets. The Sensex slumped 869.52 points or 1.06% to touch an intraday low of 80,727.11, while the Nifty50 shed 271.85 points or 1.09% to hit 24,541.60. Although indices pared some losses later, the downward pressure remained, with the Sensex still down by 723.53 points and the Nifty trading 220.90 points lower at 24,592.55 around 10:30 AM.

Highlights:

• Sensex hit intraday low of 80,727.11, down over 860 points.

• Nifty50 dropped below the 24,600 level amid global sell-off.

• Market sentiment shaken by bond yield spike and US fiscal uncertainty.

Broader Market in Red, All NSE Sectoral Indices Slip

All 13 NSE sectoral indices opened deep in the red, mirroring the widespread bearish sentiment. Broader markets were also weak, with the Nifty Midcap100 falling 0.6% and the Nifty Smallcap100 declining 0.3%. Blue-chip stocks such as Power Grid, Tech Mahindra, HCL Technologies, Nestle, Hindustan Unilever, ITC, TCS, and Mahindra & Mahindra were among the top laggards, dragging benchmarks lower. The lack of sectoral resilience signaled broad-based liquidation across investor categories.

Highlights:

• All NSE sectoral indices opened lower.

• Nifty Midcap100 and Smallcap100 indices posted early losses.

• Major blue-chip stocks were key drags on the indices.

US Fiscal Deficit and Soaring Bond Yields Emerge as Key Triggers

The primary driver behind the sell-off was concern over the US fiscal outlook. A proposed budget from US lawmakers, which includes tax cuts, raised fears of a worsening federal deficit. Moody’s recent downgrade of America’s debt outlook compounded investor worries. Bond yields on 5-year, 10-year, and 30-year US securities spiked, reflecting declining confidence among global investors. This surge in yields, seen as a flight to safety, typically triggers capital outflows from emerging markets like India, leading to risk-off sentiment.

Highlights:

• Market fears over US fiscal deficit and tax cut plans weighed heavily.

• Moody’s debt outlook downgrade added to risk aversion.

• Spike in long-term US bond yields hit emerging market flows.

Weak Global Cues Reinforce Market Caution

Global cues turned negative following a Wall Street decline on Wednesday. The bearish sentiment spilled over into Asian markets, where Japan’s Nikkei 225, South Korea’s Kospi and Kosdaq, and Hong Kong’s Hang Seng Index all dropped over 1%. Concerns around rising COVID-19 cases in certain regions and market technicals also contributed to the downtrend. Analysts noted that markets, after a short-lived recovery, have resumed their correction due to a convergence of global risk factors.

Highlights:

• Wall Street losses triggered sharp declines in Asian equities.

• Rising COVID-19 cases and overbought technical signals pressured sentiment.

• Markets resumed correction after brief recovery on Wednesday.

IT Stocks Fall on Global Demand Worries

Technology stocks came under heavy selling pressure as the US fiscal crisis cast a shadow over future demand for outsourcing and digital services. Tech Mahindra declined over 2% to Rs 1,564.70, leading the losses on the Nifty IT index. Other major IT names including Persistent Systems, HCL Technologies, and Mphasis also shed more than 2% each. With the US being the largest market for Indian tech firms, concerns around US budget instability raised questions about deal pipelines and enterprise IT spending.

Highlights:

• Tech Mahindra, HCL Tech, and Mphasis fell over 2%.

• Fiscal concerns in the US triggered doubts over IT demand.

• Nifty IT index underperformed amid global growth worries.

India VIX Jumps as Volatility Spikes

Investor fear was further highlighted by a jump in the India VIX, the volatility index, which surged 2.8% to hit 18.04 during early trade. Though it later cooled slightly to 17.54, the rise in volatility reflected heightened nervousness among traders and portfolio managers. A rising VIX typically signals investor anxiety over sudden market moves, and can lead to defensive positioning or hedging activity in equity markets.

Highlights:

• India VIX rose 2.8% to 18.04, before easing to 17.54.

• Spike in volatility signaled rising investor uncertainty.

• Traders likely increased hedging positions amid global headwinds.

Analysts Expect Continued Consolidation Amid Uncertainty

Despite the sharp fall, some analysts remain cautiously optimistic. Anand James, Chief Market Strategist at Geojit Financial Services, noted that the Nifty remains in a consolidation zone. He pointed out the formation of a green hammer candle pattern on the charts, indicating balanced trends and potential for a rebound. Around 80% of Nifty 500 stocks are still trading above their 10-day simple moving averages, providing a technical cushion. James expects the Nifty to trade between 24,677 and 24,950 in the short term, with a broader trading range between 24,060 and 25,235.

Highlights:

• Nifty seen consolidating between 24,677–24,950 in near term.

• Technical indicators suggest potential support levels are intact.

• Analysts advise caution amid volatility and global macro pressures.