The Sensex & Nifty have taken a significant downturn in India, fearing global economic slowdown. Dow Jones, Nikkie, NASDAQ and the European markets have all been grappling with a recession-like environment, as uncertainty looms in the international arena.
Major contributors in the recent past could be identified as Trump’s Election in 2025, on-going wars between Russia-Ukraine as well as the on-going tensions in the Middle-East. While Trump’s election saw people polarised, Soft Bank pledged an investment of $100 Billion and 100K AI Jobs in the US. While on the other hand, the apprehension of sanctions and taking over by a conservative government saw, many people even move out of the States.
Rumors around the new strain of HMPV Virus originating from China was also quoted by experts in India as a reason behind a sudden drop in the markets over looming uncertainty of its impact, as a case of it was also detected in Bengaluru in a new-born child.
Global Markets: A Statistical Analysis
- NASDAQ: The NASDAQ Composite Index saw a sharp decline of over 6% recently due to concerns about the U.S. economy and high interest rates. The data on joblessness in the country also gave a jolt to positive forecasts and predictions. However, it has also seen rise in shares and market values of Elon Musk driven Tesla and backed cryptocurrency- Doge Coin, and Nvdia for its ground breaking investment in Chip and Technology Manufacturing saw an overall massive rise in value.
- Nikkei 225: Japan’s Nikkei 225 Index experienced its worst sell-off since 1987, dropping 12.4% in a single day on August 5 2024. However, has since rebounded by 10.2%. This has been driven by many geopolitical considerations such as increasing budget considerations for investment in Defence Sector, as well as a fall in the currency exchange. The fall in the currency exchange led to the market being bearish, as it implied lower profits for exporting companies.
- Hang Seng Index: Hong Kong’s Hang Seng Index also faced significant declines, reflecting broader regional concerns, and over-arching concerns of Chinese interventions in its private affairs and impact on the real estate sector.
As of January 13, 2025, the Sensex fell by over 1,031 points (1.35%) to settle at 76,347.26, while the Nifty50 dropped by 345.55 points (1.47%) to 23,085.95. Various sectors have seen a downfall with the Nifty Realty index falling by 6.47%, Nifty Media by 4.54%, and Nifty PSU Bank, Metal, Consumer Durables, and Healthcare indices all falling by more than 3%.
A major pull out of over $4 Billion has added to the volatility and belief in the Indian market from the Foreign Institutional Investors (FIIs). However the resilience of retail indian investors has kept the market from a nose-dive. Growing financial awareness has also made India a significant market for indirect investments such as mutual funds and SIPs.
SIPs which are a reflection of more calculated risk and with smaller instalments of money done on a person’s behalf by an institution which empanels experts for the analysis of stocks and markets, crossed inflows of Rs. 25,000 Crore twice in the last year.
Is it a right time to invest in Indian Stock Market?
While the market volatility and the falling dollar looms over the Indian market, and the confidence is shaken by certain taxation proposals which are rolled out and then rolled back, there is definitely a need for caution to be exercised regarding the capital that is injected. Experts believe that the slow-down is due to last for a few months more before things start to improve.
All eyes would definitely be glued to newer measures proposed during the Budget of 2025 and the relief giving to the shrinking Indian middle class. However, as we exercise caution, it is also worth paying attention to market denominations beyond Stocks, such as commodities, and newer avenues of investments which are being promoted and backed by the government such as green initiatives, EV sector, as well as semi-conductors.
A careful analysis and discretionary view of stocks beyond the Nifty50 needs to also be considered, however the risk factor must be kept in mind before taking any financial step.
Note- This article does not advise/encourage taking financial risks, and encourages the reader to do his own due diligence before investing.
