Indian markets began the week on a downtrend, influenced by weak global trends and a decline in Asian markets. Global markets faced pressure ahead of the upcoming Federal Reserve meeting and concerns about slow economic growth in both Germany and China.
The Nifty 50 index on the National Stock Exchange opened with a decline of 28 points or 0.12%, landing at 24,823 points. Similarly, the BSE Sensex opened lower by 210 points or 0.26%, at 80,973.75.
Ajay Bagga, a banking and market expert, commented, “The markets are facing eight days of expected volatility as the Fed rate cut decision on September 18 approaches. The usual poor performance of markets in September is evident. Additionally, the slowdown in China and Germany is amplifying global growth concerns.” He added that the news of a major German car manufacturer potentially shutting down its factories highlights the economic issues facing Germany.
On the National Stock Exchange, most broad market indices opened in negative territory, with the exception of the Nifty MicroCap 250. Among the sectoral indices, Nifty FMCG, Nifty Media, and Nifty PSU Bank saw gains, while others declined.
Despite the challenges, experts pointed out that domestic investors are likely to buffer the Indian markets against external shocks. Bagga noted, “The impact on Indian markets is largely due to Foreign Institutional Investor (FII) selling. However, robust domestic inflows of over Rs 11 lakh crore have consistently supported the market, even with net FII outflows exceeding Rs 5.5 lakh crore from January 2022 to August 2024. We expect continued volatility for a few weeks but don’t anticipate drastic declines due to strong domestic liquidity.”
Asian markets also suffered heavy losses on Monday, driven by selling pressure following lower-than-expected U.S. payroll growth. Japan’s Nikkei 225 and Hong Kong’s Hang Seng indices both fell by over 1.50%. Japan’s Nikkei dropped 1.84%, or 632 points, while Hong Kong’s Hang Seng declined by 1.73%, or 301 points.
Taiwan’s major index, the Taiwan Weighted, also slid by over 2%, and South Korea’s KOSPI index fell by 1.15%. Overall, investors were bearish across Asian markets, with concerns about slowing growth in China and Germany intensifying the sell-off that had already been triggered by expectations of the Fed rate cut.
Indian stocks had already taken a significant hit on Friday, the last trading day of the week, with all sectoral indices finishing deeply in the red. The banking and energy sectors were particularly affected, as the Nifty 50 dropped 292.95 points or 1.17%, ending at 24,852.15. The BSE Sensex fell 1,017.23 points or 1.24%, closing at 81,183.93.
