Bloodbath On D-Street: Market Sees Sharp Fall, Sensex & Nifty Shed 1% Each Amid Weak Global Cues

Indian benchmark indices Sensex and Nifty opened on a weak note on January 16, snapping their three-day winning streak as weak global cues and profit booking took centre stage. Despite initial optimism driven by lower-than-expected US inflation figures for December, the momentum in global markets faltered, impacting sentiment in the domestic market.

At 10:50 am, the Sensex was down by 706 points or 0.92%, trading at 76,335.94, while the Nifty fell 190 points or 0.82%, standing at 23,121.60. Market breadth reflected mixed sentiment, with 1,830 shares advancing, 1,240 declining, and 119 remaining unchanged.

Global Cues & Domestic Concerns

Investor sentiment remained subdued amid concerns over a potential earnings growth slowdown, which has been a key topic during the ongoing Q3 earnings season. Additionally, lingering macroeconomic challenges, including uncertainties around the Union Budget 2025, the US Fed's rate trajectory, and stretched valuations, left little room for a market rebound.

The January effect-historically characterized by seasonal market weakness-was evident as the Nifty has already shed approximately 2% this month. Analysts highlighted that the domestic markets continue to be oversold, with unchanged fundamentals and persistent headwinds deterring a turnaround.

Sectoral indices painted a mixed picture, with Nifty IT emerging as the worst performer, plunging over 2% due to sharp corrections in heavyweight stocks like Infosys, TCS, Wipro, and HCLTech. Nifty Bank followed closely, falling over 1%, weighed down by weak performances from Axis Bank, ICICI Bank, and Kotak Mahindra Bank.

In contrast, Nifty Energy, Nifty Metals, and Nifty Infra managed to post gains of nearly 1% each, supported by a decline in the dollar index, which eased pressures on commodity prices.

Infosys shares plummeted over 5%, making it the worst-performing stock on the Nifty 50. Despite posting better-than-expected Q3 earnings, the company's downward revision of its revenue growth guidance for Q4 weighed heavily on investor sentiment.

Axis Bank shares also plunged nearly 5% following its Q3 results. Higher slippages and lagging deposit growth triggered concerns, leading several brokerages to lower their target prices for the stock. The management's subdued outlook for deposit and credit growth until FY26 added to the pessimism.

The shares of Reliance Industries surged almost 3%, providing some relief to the benchmarks. The oil-to-telecom conglomerate's better-than-expected Q3 performance, coupled with hopes of recovery after a sluggish six months, drove the uptick.

Other major gainers included Hindalco, BPCL, and Coal India, which posted gains amid sectoral strength in energy and metals.

The broader market mirrored the weakness of the benchmarks, with the midcap index falling by 0.2% and the smallcap index shedding 0.3%.

Market experts noted that while the recent three-day rally had given investors a glimmer of hope for a recovery, persistent macroeconomic and corporate earnings concerns have kept traders on edge. The strategy of "sell-on-rise" continues to dominate as investors await more clarity on critical events, including the Union Budget and global central bank policies.

In addition, analysts cautioned that while pockets of strength exist in select sectors such as energy and metals, broader market fundamentals remain challenging. For sustained recovery, they emphasize the need for stability in macroeconomic conditions, improvement in corporate earnings, and supportive policy measures.