Indian benchmark indices fell on Thursday, mirroring global losses as U.S. fiscal worries and rising Treasury yields weighed on investor sentiment.
The Nifty 50 fell 0.82% to end at 24,609.70, while the BSE Sensex dropped 0.79% to close at 80,951.99.
Other Asian markets also declined on the day, with the MSCI Asia ex-Japan index losing 0.9%. European markets also traded lower, ahead of the crucial vote in the U.S. on President Donald Trump’s tax bill.
Investors are worried the new tax and spending bill could add about $3.8 trillion to the $36 trillion U.S. debt pile.
Concerns over mounting debt and Moody’s downgrade of the U.S. credit rating last week pushed longer-dated Treasury yields to 18-month highs.
Rising Treasury yields make bonds more attractive to foreign investors, driving out capital from stocks in emerging markets such as India.
“The domestic market does not appear to be on strong legs as uncertainties have increased significantly,” said Sandeep Bagla, CEO of Trust Mutual Fund.
India’s Nifty, which rose 4.2% last week, helped by foreign inflows, ceasefire with Pakistan and U.S.-China trade truce, has lost 1.6% so far this week.
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“While some investors expect domestic flows to continue supporting the market, others remain concerned about whether economic and earnings recovery can sustain the uptrend,” Bagla said.
On the day, the broader, more domestically focused, small-caps and mid-caps fell 0.3% and 0.5%, respectively.
All 13 major sectoral indices logged losses.
The Nifty IT index fell 1.3%, pressured by its high dependence on U.S. clients amid rising economic uncertainty.
“Recent developments in the U.S. have intensified concerns about client spending in the IT sector,” said Anil Rego, founder and fund manager at Right Horizons PMS.
Consumer stocks fell 1.4%, dragged by Colgate, down 6.5% on weak March quarter profit and soft urban demand.
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