Indian Stock Markets Plummet as Investors Brace for Economic Challenges Ahead

Indian stock indices fell sharply with Sensex and Nifty shedding over 1.5% each, closing the week with substantial losses. The slump, driven by heavy selling in IT and banking sectors, reflects concerns over US Federal Reserve's rate plans and rising trade deficits, as experts call for strategic risk management.

The Indian stock market experienced a significant downturn as Sensex and Nifty both dropped by over 1.5% on the final trading day of the week. The Sensex concluded at 78,041.59 points, a decline of 1,176 points, while Nifty ended at 23,587.50 points, losing 364.20 points. All sectoral indices ended in negative territory, with the IT, PSU Bank, auto, and realty sectors hit hardest.

Throughout the week, Sensex and Nifty saw a decline of around 5 percentage points each. Ajit Mishra, SVP of Research at Religare Broking, noted that the downturn in IT and banking stocks is intensifying market pressure and suggests traders should adapt their positions with a significant focus on risk management.

The consistent decline across all five trading sessions this week was largely due to foreign portfolio investors selling, increased trade deficits, and indications from the US Federal Reserve that rate cuts would be fewer than anticipated. India's merchandise trade deficit hit a record high of USD 37.84 billion, driven by increased imports over exports, further affecting domestic market sentiment.

Despite last week's market rebound, the Sensex remains nearly 6,000 points shy of its all-time high of 85,978 points. Looking ahead, market analysts anticipate a possible recovery led by large-cap stocks, but investors are cautioned to monitor upcoming Reserve Bank of India policy minutes, which could influence market movements.

(With inputs from agencies.)