Indian equity markets witnessed significant selling pressure as foreign institutional investors (FIIs) and domestic institutional investors (DIIs) offloaded securities. FIIs were net sellers, disposing of securities worth ₹1,877.84 crore, while DIIs also sold securities with a net total of ₹2.23 crore.
The downturn was triggered by a global sell-off after Fitch downgraded the US credit rating from AAA to AA+. The downgrade came amidst mounting concerns over the US government’s escalating debt levels and the potential for a recession.
Adding to the market turmoil, the US 10-year bond rate surged to over 4% for the first time since 2011, raising alarm among investors. Rising bond yields are often interpreted as an indicator of growing risk aversion in the market.
On Wednesday, PSU banks, metals, and auto stocks faced the brunt of the decline, while FMCG and healthcare stocks showed resilience and bucked the trend.
The benchmark indices, the S&P BSE Sensex and the Nifty 50 index, experienced notable losses. The Sensex closed at 65,782 after falling by 676 points, or 1.02%, while the Nifty 50 lost 207 points, or 1.05%, closing at 19,526. The broader market also underperformed, with the S&P BSE Mid-Cap index down 1.39% and the S&P BSE Small-Cap index down 1.18%.
Tata Motors, Bajaj Finserv, HDFC Bank, and Reliance Industries were among the major drags on the market. Market breadth remained negative, with 2,428 declining shares and only 1,176 climbing shares on the BSE. Additionally, 134 shares remained unchanged.
Commenting on the market performance, Siddhartha Khemka, Head – Retail Research at Motilal Oswal Financial Services, stated, “Domestic equities saw downward pressure following global peers amid weak economic data and a downgrade in US sovereign credit rating. Nifty opened lower and witnessed profit booking throughout the session to close with a loss of 219 points (-1.1%) at 19,514. India’s VIX sharply rose by 10%, indicating volatility in the market. The broader market also faced the brunt, with Nifty Midcap 100 and Small Cap 100 down more than 1%.”
Khemka added, “All sectors ended in red with PSU Bank, Metals, and Auto being the top losers. Globally, markets including Indian equities came under pressure after Fitch Ratings downgraded the U.S. sovereign credit rating from AAA to +AA. Furthermore, weak economic data from the United States, Eurozone, and China dampened investors’ sentiments. However, strong GST collection in July and a surge in domestic core output data kept the downside in check. Going ahead, markets could remain subdued given the gloomy global environment. Stock-specific action is likely to continue in the market with the ongoing result season.”
Disclaimer: The information provided in this article is for general informational purposes only. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of Clout Scoop News or its affiliates. Readers are strongly advised to conduct their research and consult with financial experts before making any investment decisions based on the contents of this article. Clout Scoop News does not endorse or promote any specific stocks, securities, or investment strategies mentioned in this article.
