Bank Stocks Drag Benchmarks Lower
Indian equity markets ended Monday in the red, with banking and financial stocks leading the decline. The Nifty 50 index fell 0.71% to close at 23,644.9, while the BSE Sensex dropped 0.57% to settle at 78,248.13. Both indexes oscillated between modest gains and sharp losses before closing near the session’s lows. Ten out of the 13 major sectors on the Nifty slid, with financials losing 1%, snapping a two-day gaining streak. Heavyweights HDFC Bank and Reliance Industries each declined by 1%, exerting downward pressure on the indices.
Small-cap stocks also struggled, with the Nifty Smallcap 100 index losing 0.6%. In contrast, midcaps showed resilience, as the Nifty Midcap 100 index edged 0.4% higher. Meanwhile, the auto sector took a hit, dropping 1.4% ahead of upcoming monthly sales data, further weighing on market sentiment.
U.S. Treasury Yields Spark Foreign Outflows
The rise in U.S. Treasury yields, fueled by the Federal Reserve’s projection of a slower rate-cutting trajectory in 2025, dampened the appeal of emerging market investments, including Indian equities. Higher yields have intensified foreign outflows and raised concerns about elevated valuations in Indian equity markets. Saurabh Jain, Assistant Vice President of retail equities research at SMC Global Securities, noted that these factors, coupled with diminishing hopes of aggressive U.S. rate cuts, continue to pressure investor sentiment.
The impact of soaring Treasury yields is not limited to India; equity markets across Asia, Europe, and the U.S. also faced headwinds. Analysts highlighted that foreign investors are reallocating funds toward higher-yielding U.S. assets, creating turbulence in global markets.
Mixed Domestic Performance Amid Market Pressures
Despite the broad market weakness, a few stocks defied the trend. JSW Energy gained 2.8% after announcing a deal to acquire renewable power company O2 Power Midco Holdings. Adani Enterprises also saw robust gains, surging 7.6% following news that its new airport in Navi Mumbai is set to commence operations by May.
However, such isolated gains could not offset the broader negative sentiment. Analysts expect market volatility to persist as investors navigate global macroeconomic challenges and await key domestic data releases later in the week.
