Sensex tanks 4,000 points in week on signs of slower US rate cuts
MUMBAI: Across-the-board selling pulled the sensex down by nearly 1,200 points on Friday as foreign funds sold heavily again in the closing hours. This was the fifth consecutive session of losses for the index, losing nearly 4,100 points or 5% during the week.
A host of global and domestic factors – a hawkish statement from the US central bank chief, continuous foreign fund selling, rupee plunging to a new all-time low and weak trade data – weighed on investor sentiment, market players said.
In these five sessions, the sensex has erased the gains that were accumulated in the last four weeks, analysts pointed out. From its Sept 26 all-time peak of 85,978 points, the sensex is now down 7,936 points or 9.2%.
Like in the last few sessions, on Friday also foreign portfolio investors (FPIs) were net sellers at about Rs 3,600 crore, BSE data showed. In contrast, again like in the last few sessions domestic funds were net buyers, recording a net inflow of Rs 1,374 crore. Nifty on Friday lost 364 points or 1.5% to 23,588 points.
“Disappointment regarding the slower-than-anticipated rate cuts by the US Fed has adversely affected global market sentiment. This bearish outlook is particularly impacting the domestic market, which is already contending with high valuations and low earnings growth,” said Vinod Nair of Geojit Financial Services.
“The selloff (this week) has been widespread, with significant declines in mid- and small-cap stocks, where valuation premiumisation is at historical peak. The IT sector is notably underperforming as it was among the best performers in anticipation of rapid rate cuts in 2025,” Nair said.
Analysts are suggesting extreme caution. According to Osho Krishnan of Angel One, weak global cues initiated the downward move in the Indian market but the follow-up selloff showcased Bears’ eagerness to colour the market red ahead of Christmas. “The advance declines have strongly turned to favour bears, and it is advisable to avoid trying to catch the falling knife with anticipation of bottom-fishing.”
The day’s session left investors poorer by Rs 9 lakh crore with BSE’s market capitalisation now at Rs 449 lakh crore. From its all-time high peak at Rs 492 lakh crore, investors have lost about Rs 43 lakh crore worth of wealth. Among the 30 sensex stocks, 28 closed in the red. Of these, Reliance Industries, HDFC Bank and Mahindra contributed the most to the day’s loss in the index. Nestle and Titan closed only marginally higher, BSE data showed.
