Indian shares tumbled on Monday, with the midcap index recording its biggest slide in seven months, after an unexpectedly strong U.S. jobs report signalled fewer Federal Reserve rate cuts amid persistent worries over slowing domestic earnings.
The benchmark Nifty 50 fell 1.47% to 23,085.95, while the BSE Sensex shed 1.36% to 76,330.01. Both benchmarks closed at their lowest in about seven months.
The broader, more-domestically focussed small- and midcaps sank a steeper 4% each, which analysts said was due to relatively richer valuations that could be tested if corporate earnings disappointed.
“The slowdown in Indian economic growth is also leading to worries of a likely decline in corporate earnings growth,” said Yashovardhan Khemka, senior manager of research and analytics at Abans Holdings.
The markets were also hit by unexpectedly strong U.S. jobs data, which led investors to price in one U.S. rate cut of 25 basis points in 2025.
Indian shares log weekly losses as earnings worries overshadow IT gains
That lifted 10-year Treasury yields to 14-month highs and sent the dollar rallying, making emerging markets such as India less attractive for investment.
This has exacerbated foreign outflows, triggering a sharp decline in Indian markets, said Khemka.
Foreigners have pulled out around $2.5 billion worth of Indian equities so far in January, which has also sent the rupee plummeting to record lows, including on the day.
All 13 major sectors declined and forty six of the Nifty 50 constituents logged losses. HDFC Bank, the heaviest stock on both benchmarks - shed 1.6%.
Among individual stocks, D-mart operator Avenue Supermarts lost about 5% after analysts flagged pressure on the company’s operating profit margins.
Investors await domestic consumer price inflation data, due after market hours on Monday. A Reuters poll of economists expects India’s inflation to have eased to 5.3% in December on moderating food price rises.
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