Indian equity benchmarks slumped sharply on May 20, as weak global cues, persistent foreign investor selling, and heightened macroeconomic uncertainties dragged down market sentiment. The Sensex fell 604.57 points or 0.74 percent to 81,454.85, while the Nifty declined 167 points or 0.67 percent to 24,778.45 by 1:30 PM. The intraday selloff marked the third straight session of losses, with a broad-based decline seen across sectors.
Of the 13 major sectoral indices on the NSE, 10 were in the red, led by sharp losses in FMCG, auto, and financial stocks. On the BSE, market breadth remained negative with 2,104 shares declining against 1,331 advancing and 103 remaining unchanged.
Highlights
Sensex falls over 600 pts; Nifty breaks 24,800
10 of 13 NSE sectors trade in the red; FMCG, auto, and financials lead losses
Market breadth weak; over 2,100 stocks decline on BSE
Broader global cues, FIIs selling, and US debt downgrade cited as major pressure points
Global Risk-Off Sentiment Deepens on Wall Street Weakness and Bond Yield Spike
Investor mood soured early as global markets extended their losses. Asian bourses mirrored Wall Street futures, which remained under pressure following hawkish commentary from US Federal Reserve officials. Atlanta Fed President Raphael Bostic signaled only one rate cut in 2025, dashing hopes of a quicker policy pivot and reigniting fears of prolonged high borrowing costs.
Adding to global unease, Japanese government bond yields surged after a disappointing 20-year bond auction, with the yield on 30-year JGBs hitting a record peak. This sparked renewed fears about Japan’s fiscal stability, triggering broader sell-offs in risk assets, including equities in emerging markets like India.
Highlights
Fed’s Bostic hints at just one rate cut in 2025; triggers interest rate worries
Japanese bond yields spike, raising global borrowing cost concerns
Risk-off mood deepens across Asian and emerging markets
Wall Street futures signal weak start; adds to bearish sentiment
FIIs Continue Selling Spree as Valuations Turn Stretched
The relentless selling by Foreign Institutional Investors (FIIs) remained a key headwind. According to exchange data, FIIs sold Indian equities worth Rs 525.95 crore on May 20. Market experts flagged concerns over premium valuations and advised caution, especially amid macro uncertainty. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that institutional selling on rallies could cap further upside, indicating a likely phase of consolidation or correction ahead.
Highlights
FIIs net sellers for third session; Rs 525.95 crore outflow on Monday
Experts warn of high valuations limiting upside
Institutional profit booking emerges as a near-term trend
Mid- and small-cap stocks also see pressure amid liquidity drain
Trade and Currency Headwinds Add to Volatility
Investor confidence was further dented by lingering uncertainty surrounding India-US trade talks. Commerce Minister Piyush Goyal’s US visit ended without a breakthrough, as both sides continued negotiations to avert potential US tariffs expected later this month. Meanwhile, the broader mood was overshadowed by rising global trade tensions, with US Treasury Secretary Scott Bessent hinting at fresh tariffs on key trading partners—a development that could trigger renewed global supply chain disruptions and weigh on equity risk premiums.
In the currency market, the rupee weakened 13 paise to 85.55/$, tracking foreign fund outflows and strengthening of the US dollar amid rising US bond yields. This added to pressure on foreign-exposed sectors and widened the risk for import-dependent firms.
Highlights
India-US trade deal still elusive; tariffs loom as deadline nears
US signals possible new tariffs; trade friction threatens global outlook
Rupee weakens to 85.55/$ amid FII outflows and strong dollar
Currency weakness may affect cost structures of import-reliant sectors
Moody’s Downgrade of US Debt Outlook Fuels Caution
Adding another layer of caution, Moody’s downgraded the US sovereign credit outlook, citing concerns over fiscal sustainability and lack of political consensus on debt reduction. Although not an outright rating cut, the move exacerbated global unease and led to heightened risk aversion across asset classes. Vijayakumar of Geojit said that this development has “created an undercurrent of unease in financial markets,” prompting investors to trim risk exposure across the board.
Highlights
Moody’s cuts US debt outlook over long-term fiscal risks
Adds to global market caution and investor defensiveness
Risk-averse sentiment grows amid rising macro uncertainty
Gold and other safe-haven assets see marginal inflows amidst equity weakness
