Sensex drops 225 points and Nifty slides 17,875 pts as Equity market opens on a negative note

Equity indices in India saw a decline in early trade on Wednesday as the benchmark Sensex and Nifty slipped amidst mixed trends in global markets. The negative opening comes amidst investors remaining cautious and awaiting cues on the interest rate trajectory in the US.

As of Wednesday morning, the BSE Sensex slumped 225.95 points or 0.37 per cent to 60,806.31 points while the NSE Nifty dropped 54.50 points to 17,875.35 points. Among the 30 shares in the Sensex pack, except for eight stocks such as Reliance Industries, State Bank of India, and Maruti, the rest were trading in the negative territory.

The negative opening for the domestic market comes a day after the 30-share Sensex surged 600.42 points or 0.99 per cent to close at 61,032.26 points on Tuesday. The broader NSE Nifty had also jumped 158.95 points or 0.89 per cent to finish at 17,929.85 points.

This Wednesday, stocks in Asia, including in Japan, China, and Hong Kong, were trading in the red. On Tuesday, European and US markets had closed on a mixed note. Deepak Jasani, Head of Retail Research at HDFC securities, said Asian stocks and US equity futures fell on Wednesday as investors weighed hot American inflation data and mixed commentary from central bankers on the outlook for interest rates.

In the US, the January consumer-price index showed the cost of living rising 6.4 per cent year-over-year, down from 6.5 per cent in December but higher than the Wall Street forecast of 6.2 per cent.

The foreign portfolio investors (FPIs) were net buyers, acquiring shares worth Rs 1,305.30 crore on Tuesday.

The negative trend in the equity market in India and across the world is attributed to investors remaining cautious amid uncertainty around the US Federal Reserve’s interest rate policies. Investors are keeping a close watch on inflation data, which is being seen as an indicator of the Fed’s policy stance.

Experts believe that the impact of rising inflation on the Fed’s policy and interest rates is likely to be seen in the coming days. This, in turn, will affect the equity markets worldwide.

In India, the markets are expected to remain volatile in the short term as investors continue to weigh global cues and monitor the country’s economic situation. While FPIs have been net buyers recently, domestic investors have been net sellers, indicating a level of caution amongst investors.

Analysts believe that sectors like healthcare, consumer staples, and IT services are likely to provide investors with some stability during these volatile times. These sectors have shown resilience in the past and are likely to perform well, even during a market downturn.

It is important for investors to remain cautious during such times and exercise discretion while making investments. Diversification across sectors and companies can provide a level of protection against market volatility.

In conclusion, the equity market in India and across the world has seen a negative opening amidst mixed trends in global markets. Investors are cautious as they await cues on the interest rate trajectory in the US, with rising inflation being seen as an indicator of the Fed’s policy stance. While the markets are expected to remain volatile, sectors like healthcare, consumer staples, and IT services are expected to provide some stability. It is important for investors to remain cautious and exercise discretion while making investments.