Indian Stock Market Falls Over 1% Amidst Global Jitters

Mumbai, India - The Indian stock market witnessed a sharp sell-off on Tuesday, tracking weakness in global markets. Both the benchmark Nifty 50 and Sensex indices fell by over 1%, mirroring a cautious sentiment across Asia.

The Nifty 50 opened below the key 22,000 level and touched an intraday low of 21,817, down over 238 points from Monday's close. The Sensex followed a similar trajectory, opening around 300 points lower and hitting an intraday low of 72,007. The broader market indices, including mid-cap and small-cap segments, also experienced significant declines.

Market experts attributed the fall to a confluence of factors:

• Shifting Global Monetary Policy: The Bank of Japan's surprise decision to abandon its negative interest rate policy triggered a reversal in Asian markets. This, according to Avinash Gorakshkar of Profitmart Securities, led to selling pressure except for Japan's Nikkei index.

• US Fed Rate Hike Concerns: Hopes for a US Federal Reserve rate cut have dimmed after recent hotter-than-expected inflation data. The upcoming FOMC meeting is now anticipated to maintain the current higher interest rate regime, impacting assets outside the US dollar and Treasury yields, as per Saurabh Jain of SMC Global Securities.

• Income Tax Planning: Avinash Gorakshkar further noted that March typically sees investors rejig portfolios for tax purposes. This can involve profit booking or strategic loss harvesting to minimize tax liabilities.

• Weak Asian Cues: The broader Asian market weakness, particularly in Hong Kong's Hang Seng index, following the Bank of Japan's announcement, also contributed to the cautious mood in India, as per Gorakshkar.

• Domestic Market Correction: The Indian market itself has been undergoing a correction, with the mid-cap and small-cap indices experiencing significant declines in the last month. This weakness, according to Gorakshkar, is further dampening overall market sentiment.

Looking ahead, investors will be keeping a close eye on the FOMC meeting and any guidance provided by the Fed regarding future rate hikes. While some experts anticipate a potential rate cut later in the year, incoming economic data will be crucial in determining the timing of such a shift.