Stock market today: Indian equity benchmark indices, Nifty50 and BSE Sensex, tanked in trade on Thursday. While Nifty50 went below 24,550, BSE Sensex was down over 1,100 points intraday. Nifty50 ended at 24,609.70, down 204 points or 0.82%. BSE Sensex closed at 80,951.99, down 645 points or 0.79%. The stock markets reflected the global market weakness due to higher bond yields and US debt issues.
Among Sensex companies, Mahindra & Mahindra, Bajaj Finserv, Tech Mahindra, Power Grid, ITC, Hindustan Unilever, Reliance Industries and Maruti were the major losers.
IndusInd Bank, Bharti Airtel and UltraTech Cement showed positive performance.
"The key benchmark indices witnessed declines amid US fiscal concerns that the proposed budget bill could significantly increase the national debt, pushing US treasury yields higher due to tepid long-term bond demand. Adding to the pressure, a major credit rating agency's downgrade of the US credit outlook sparked broad-based selloffs across Asian markets," Vinod Nair, Head of Research, Geojit Investments Limited, said.
Why did stock market fall today? Top reasons
1) Treasury Yields in United StatesLong-term US Treasury yields reached peak levels not seen since 18 months ago. The 30-year Treasury bond yield stayed above 5% following an 18-month peak during Asian trading hours. The elevated yields are causing funds to shift away from stocks, particularly affecting emerging economies such as India.
2) US Fiscal Issues Following Moody's AssessmentThe financial community remains cautious after Moody's reduced the United States' credit rating last Friday, pointing to the nation's escalating debt obligations. This credit assessment has led to increased global caution, affecting both American and Asian financial markets.
Financial observers are monitoring the proposed taxation legislation, scheduled for voting this week, which analysts suggest could increase American debt by $3.8 trillion, on top of the existing $36 trillion.
"The fundamental issue is the high fiscal deficit of the US, which the market feels is unsustainable," said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
3) Subdued U.S. Bond PerformanceA lacklustre response to Wednesday's $16 billion auction of 20-year bonds demonstrated investors' hesitation towards U.S. assets, resulting in elevated yields.
"The weak US 20-year bond auction and the spike in yields of 5-year, 10-year and 30-year bonds indicate the declining confidence in US bonds," Vijayakumar said.
This impacted Asian markets negatively, with MSCI's broadest index of Asia-Pacific shares outside Japan declining 0.5%. Japan's Nikkei decreased 0.7% due to yen appreciation. Chinese benchmark indices reduced by 0.2%, whilst Hong Kong's Hang Seng index fell 0.8% during early trading.
In the previous session, the Dow declined 1.9%, S&P 500 fell 1.6%, and Nasdaq decreased 1.4% following the disappointing bond auction.
4) Market Adjustment Post Strong GainsSameet Chavan, Head of Research (Technical and Derivative) at Angel One, observed that recent substantial gains have led to overbought market conditions, with values significantly exceeding short-term moving averages. Despite an overall positive trend, a period of stabilisation is likely in the immediate future. "A sustained move below the recent matching lows near 24,700 could trigger further profit booking, potentially dragging prices towards 24,600 and the 20-day EMA near 24,500," he added.
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
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