Sensex Drops 600 Pts from High, Nifty Below 24,750 on Fed Minutes, Global Cues

Indian benchmark indices reversed early gains and slipped sharply into the red on Thursday, rattled by hawkish commentary from the US Federal Reserve, volatility ahead of F&O expiry, and rising geopolitical tensions. After surging more than 500 points in early trade, the BSE Sensex shed 600 points from its day’s high, while the NSE Nifty breached the 24,750 level after touching 24,889 in the opening session. Weakness in key stocks including Jio Financial Services, HDFC Life, Bajaj Finance, and HDFC Bank contributed to the decline.

Highlights:

• BSE Sensex dropped 600 points from early peak of 81,816.

• NSE Nifty fell below 24,750 after testing 24,889 in initial trades.

• Jio Financial, Bajaj Finance, HDFC Life, and HDFC Bank among top laggards.

• Weak global cues, derivatives expiry, and inflation concerns triggered selling pressure.

Fed’s Hawkish Minutes Trigger Risk-Off Sentiment Across Global Markets

The release of the US Federal Reserve’s policy meeting minutes late Wednesday rattled equity markets globally. The minutes revealed that “almost all” of the 19 Federal Open Market Committee (FOMC) members remain concerned about persistent inflation and believe it may stay elevated for longer than anticipated. Although the Fed held interest rates steady at its May 6–7 meeting, the tone of the minutes suggested continued hawkishness, dampening hopes for rate cuts in the near term. The implication of “difficult trade-offs” between inflation control and employment stability has increased uncertainty among global investors, feeding into Thursday’s sharp reversal in Indian indices.

Highlights:

• Fed minutes revealed widespread concern about high inflation persisting.

• Policymakers hinted at potential delays in rate easing, dampening sentiment.

• Inflation-employment trade-off adds complexity to Fed’s policy path.

• Indian equity market mirrored global caution and pulled back sharply.

Derivatives Expiry Adds to Market Volatility, Nifty Remains Range-Bound

The expiry of monthly derivatives contracts for the Nifty and Bank Nifty further intensified market volatility. According to Bajaj Broking Research, the Nifty has been consolidating between 24,400 and 25,200 over the last 12 sessions, and no clear breakout appears imminent. Traders reduced their positions ahead of the expiry, creating intraday swings and adding pressure on frontline stocks. Market participants expect this consolidation phase to persist unless fresh triggers—either macroeconomic or earnings-related—catalyze a directional move.

Highlights:

• Monthly F&O expiry created volatility as traders lightened positions.

• Nifty consolidating in the 24,400–25,200 band with no decisive breakout.

• Analysts expect continued sideways trend in absence of fresh cues.

• Derivative positioning suggests cautious investor stance near term.

Renewed Geopolitical Risks from Europe Weigh on Risk Appetite

Sentiment was also hit by renewed geopolitical tensions, particularly in Europe, where Germany’s vocal support for Ukraine’s military capabilities has sparked warnings from Russia. German Chancellor Friedrich Merz’s pledge to help Ukraine develop long-range Taurus missile systems reignited fears of direct NATO involvement in the conflict. Russian President Vladimir Putin previously warned that German involvement in offensive operations could provoke retaliatory consequences. Security analysts have flagged the potential for escalation, weighing on risk assets globally and making equities less attractive in the short term.

Highlights:

• Germany’s support for Ukraine’s missile capabilities escalates tensions with Russia.

• Russian warnings against German involvement revive geopolitical risk aversion.

• Analysts warn escalation could drag NATO deeper into the conflict.

• Global markets remain sensitive to developments in Eastern Europe.

Brent Crude Rises Above $65, Raising Macro Concerns for India

Adding to market pressure, international crude oil prices rose 1.11% on Thursday, with Brent hitting $65.62 per barrel. The uptick in oil prices poses multiple macroeconomic challenges for India, which imports nearly 85% of its oil needs. Higher crude costs translate into a wider current account deficit, rupee depreciation, and elevated inflation—factors that can hurt both consumption and corporate profitability. The increase particularly affects oil-sensitive sectors such as transport, aviation, and FMCG, further pressuring equity valuations in these segments.

Highlights:

• Brent crude rose 1.11% to $65.62/barrel, triggering inflationary fears.

• Rising oil prices pressure India’s current account and rupee value.

• Equities in oil-sensitive sectors face renewed selling pressure.

• Macro instability could persist if crude continues upward trajectory.

Market Outlook: Range-Bound Trade Likely to Continue

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the Nifty continues to consolidate within a narrow 500-point band between 24,500 and 25,000. He said, “A breakout or breakdown from this range appears difficult in the near term.” With global headwinds from the Fed and geopolitical instability, coupled with domestic macro risks like rising oil prices, the Indian market may remain directionless in the coming sessions, unless a significant domestic trigger shifts momentum decisively.

Highlights:

• Nifty seen consolidating within 24,500–25,000 range.

• Breakout unlikely without macro or earnings-related trigger.

• Global and domestic headwinds signal continued caution.

• Strategy likely to remain stock-specific amid volatility.

Impact on Indian Stock Market:

• Broader market correction likely as global macro uncertainty resurfaces.

• Rate-sensitive sectors like financials and real estate may underperform amid fears of higher-for-longer interest rates globally.

• Oil-importing sectors and consumer stocks may see pressure due to rising crude prices and rupee risks.

• Consolidation likely to continue between 24,400–25,200 on Nifty unless a decisive trigger emerges.

Focus Points for Investors:

• Watch global inflation cues and US Fed commentary for future rate signals.

• Avoid aggressive positions in financials, autos, and oil-sensitive sectors until volatility eases.

• Track Brent crude prices and rupee trends, especially for import-heavy companies.

• Stay cautious near expiry periods, especially during macro-heavy news weeks.

• Look for accumulation opportunities only near lower support levels in strong fundamental stocks.