Nifty opened with a 5% gap down, reflecting an unwelcome historical correction, and remained under considerable pressure for the majority of the trading day. By the end of the day, the index regained some of its lost ground, but the damage had already been done.
Tariff-fuelled selloff intensified across the Asian and US markets as investors dumped riskier assets on growing fears of a global recession. China’s retaliation to US tariffs and little indication that the White House will back down has also hurt sentiments.
After turning positive in the month of March, FIIs returned to their selling ways as they dumped Rs 14,000 crore worth stocks so far from India in April. Before March, they sold consistently for six months.
Rising US Treasury yields have made bonds more attractive compared to stocks, leading FIIs to reallocate funds to safer US markets. Additionally, a stronger US dollar has reduced the appeal of emerging markets like India.
Also Read: A 2020 flashback? Nifty tanks 5% in one of the steepest post-Covid drops
The rupee’s depreciation against the dollar has also eroded the returns of FIIs when converting their rupee holdings back into dollars. This has been a significant factor in their decision to exit Indian markets.
The Indian rupee logged its steepest one-day decline in nearly three months on Monday at 85.83. This has been the worst single-day fall since January 13.
Analysts say the recent downturn in the market has resulted in unprecedented lows for the calendar year, prompting participants to adopt a more cautious approach as they navigate these challenging times. This decline has been largely influenced by significant weaknesses in global markets, which have cast a shadow over investor sentiment.
“However, any signs of stabilization or improvement on the global front are likely to ignite a powerful recovery in the Indian markets, revitalizing confidence and sparking renewed optimism among market participants,” said Rajesh Bhosale, Technical Analyst, Angel One.
“For now, markets may remain on edge as global uncertainties continue to weigh on risk appetite,” said Vikram Kasat, Head – Advisory, PL Capital – Prabhudas Lilladher.
