Taking Stock | Indian markets decline amid foreign selling, earnings concerns

HSBC’s latest flash survey revealed a slowdown in India’s private sector growth in January. While manufacturing activity showed resilience, with the PMI rising to 58 from December’s 56.4, the services PMI fell sharply to 56.8 from 59.3—the lowest in over two years. The composite index dropped to 57.9 from 59.2 in December.

Meanwhile, Asian equities rose, buoyed by the S&P 500’s record close after US President Donald Trump advocated for lower interest rates and cheaper oil. Meanwhile, the Bank of Japan raised its policy rate by 25 basis points to 0.5 percent, the highest since 2008, in line with forecasts. Following the rate hike, the Japanese yen weakened slightly, trading at 155.18 against the dollar.

Outlook for January 24

Prashanth Tapse, Senior VP (Research), Mehta Equities

Markets ended weak in volatile trades amid selling in auto, oil & gas and realty shares. A sharp appreciation in rupee against the dollar limited the fall, but undertone continues to remain cautious with a weak bias. Investors are likely to maintain caution ahead of the upcoming Union Budget announcement.

Vinod Nair, Head of Research, Geojit Financial Services

The market is haywire, with sentiment so weak that even results in-line with expectations are triggering selloffs. While the broader market is under pressure, positively, large-cap stocks are showing some resilience. From the taper-tantrum to geopolitical risks, the Indian market has borne numerous challenges in its history. Similarly, the ongoing appreciation of the USD could reverse once market yields flatten out, as the Trump administration is to sustain is slowing. This negative market bias is not expected to persist for long. For long-term investors, this is not the time to sell but rather be patient and adopt an accumulation strategy

Ameya Ranadive Chartered Market Technician, CFTe, Sr Technical Analyst, StoxBox

Indian frontline indices lost their early gains, initially bolstered by optimistic global market trends. The downturn was primarily driven by concerns over moderating corporate earnings, which largely offset the positive impact of lower oil prices and anticipated US rate cuts. The decline was broad-based, with small-cap stocks suffering the most. As the market stayed negative, 11 of the 13 major sectors struggled, except for IT and FMCG. Pharma and Media stocks faced notable pressure, particularly from heavyweight losses post-earnings. Cyient Ltd experienced a sharp drop following weak Q3 results, compounded by the CEO's resignation and lower FY25 growth and margin forecasts.

The benchmark index began the trading session with a subdued performance, experiencing persistent volatility throughout the day. Ultimately, it closed in the lower quartile and recorded a decline of 111 points on a weekly basis, accompanied by relatively low trading volume. The broader indices continued to underperform compared to the Nifty50 benchmark, while on the sectoral front, all indices except for the FMCG sector ended in the red, contributing to a notably pessimistic market breadth.

Shrikant Chouhan, Head Equity Research, Kotak Securities

Indian equity markets continued their underperformance versus most global markets this week. Broader market remained weak with the midcap and the smallcap indices underperforming the larger peers. Majority of the sectoral indices ended the week in the red with BSE realty index witnessing sharp correction. BSE IT index was an outlier as it performed strongly in a relatively weak market. FIIs continue to remain net sellers of Indian equity, adding pressure on the market performance. Q3FY25 earnings season has largely in line with our subdued expectations. INR appreciated marginally and Brent crude has corrected this week. Multiple events including global events, upcoming Union Budget, RBI policy and ongoing Q3FY25 season will continue to shape market movements over the next fortnight.