The NSE Nifty 50 has plunged into correction territory, with the index dropping over 10 percent from its all-time high of 26,277.35 set in September.
The market downturn was triggered by a combination of factors, including a strengthening US dollar following the re-election of President Donald Trump and concerns about the high valuations in Indian equities, which led foreign investors to pull back, as per a report by MoneyControl.
The Nifty dropped 374 points to an intraday low of 23,509.6 with a decline of 1.6% from the previous session. It ended the day with a loss of 1.4% at 23,559.05. The BSE Sensex mirrored the loss and slipped by more than 1,100 points to hit a low of 77,533.3 before closing at 77,690.95. According to Reuters, foreign investors have pulled out around $14 billion from Indian equities since late September.
Moreover, the benchmark Nifty 50 index briefly dipped below its 200-day moving average—a crucial technical level—for the first time in 20 months.
Wednesday’s closing also marked the fifth consecutive day of losses for both indices, with foreign institutional investors (FIIs) leading the selling pressure. Experts, as per MoneyControl, attributed the correction to a mix of concerns over elevated valuations, weaker-than-expected corporate earnings, and rising inflation.
The broader global economic landscape has also weighed heavily on Indian markets. A strengthening dollar, largely fueled by expectations of strong support for President-elect Trump’s economic policies, has contributed to the pressure on emerging-market assets.
The MSCI Emerging Markets index has suffered significant losses, losing $650 billion in market capitalization over recent days. Meanwhile, emerging-market currencies have struggled as the US dollar reached a two-year high.
In India, corporate earnings have been another area of concern. Many companies have reported their weakest quarterly performances in over four years, raising doubts about the sustainability of growth in an already high-priced market.
Inflation has also been a key issue, with October’s retail inflation rising to a 14-month high of 6.21 percent, further dampening investor sentiment and reducing expectations of an interest rate cut by the Reserve Bank of India.
