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Monday's trading session on the Indian equity markets concluded with a significant downturn, mirroring the negative trends observed in global markets and reflecting reactions to the proposals outlined in the recently presented Union Budget. The benchmark indices, the Sensex and the Nifty, experienced substantial declines, closing at 77,187 and 23,361 respectively, representing losses of 319 and 121 points. This widespread negative sentiment was largely attributed to the weakness in Asian markets, triggered by US President Donald Trump's imposition of tariffs on Canada, Mexico, and China. This action fueled anxieties about the potential escalation of a broader trade war across the Asia-Pacific region, creating a ripple effect that impacted investor confidence in the Indian markets. The uncertainty surrounding international trade relations significantly contributed to the bearish market sentiment.
The underperformance of mid-cap stocks further exacerbated the market's negative trajectory. The Midcap index experienced a considerable drop of 497 points, closing at 52,989, highlighting a broad-based decline across various market segments. The Nifty Bank index also followed suit, plummeting by 296 points to settle at 49,211. Capital goods and infrastructure sectors bore the brunt of the selling pressure, with prominent players such as L&T, BEL, HAL, Siemens, and JSW Energy among the biggest losers. These companies' share prices experienced significant declines, primarily due to the perceived lackluster nature of the FY26 budget proposals for the sector. The relatively sluggish capital expenditure plans outlined in the budget caused investor concern, leading to a second consecutive day of decline for these stocks. The lower-than-expected allocations further dampened investor sentiment, prompting a wave of selling in these already vulnerable sectors.
The decline in the Nifty index was also significantly influenced by the poor performance of heavyweight stocks such as L&T, Reliance Industries, and HDFC Bank. These large-cap companies' underperformance had a disproportionately large impact on the overall index's movement, contributing significantly to the substantial point loss. Adding to the market's woes was the pressure faced by metal stocks, with the index declining by nearly 2%. This downturn was largely attributed to a rebound in the US dollar, which negatively impacted investor sentiment and led to further selling pressure in the metal sector. However, despite the overall bearish trend, some sectors bucked the negative market sentiment. The auto sector displayed positive momentum, driven by strong January sales figures. Mahindra & Mahindra (M&M) and Eicher Motors, in particular, saw significant gains, exceeding 3% each. Eicher Motors reached a record high following the release of its impressive monthly sales data, indicating robust demand and positive future prospects for the company.
The Non-Banking Financial Companies (NBFCs) sector also experienced a positive response, fueled by favorable announcements in the Union Budget. Companies like Bajaj Finance, Shriram Finance, and Cholamandalam Investment witnessed gains ranging from 2% to 5%, reflecting investor confidence in the sector's future prospects as outlined in the budget. Similarly, the consumer discretionary sector received a boost from budget proposals, with stocks like Voltas, Blue Star, and Havells registering gains. These positive performances in specific sectors provided a small counterbalance to the predominantly negative market sentiment. In the meantime, the Indian rupee weakened against the US dollar, surpassing the 87 mark for the first time, mirroring the decline of other regional currencies. This further highlighted the broader weakness in global markets and added to the overall negative sentiment affecting the Indian equity markets. The interplay between global trade tensions, budget proposals, and the performance of specific sectors painted a complex picture of the Indian market's current state.
Source: Nifty drops 120 points amid global weakness, Budget headwinds; IT stocks rise