Companies Economy Live May 22, 2025 0 Comments

Sensex, Nifty tumble as US debt concerns trigger global selloff

Benchmark indices witnessed sharp declines on Thursday, with the Sensex plunging 644.64 points or 0.79 per cent to close at 80,951.99 and the Nifty 50 falling 203.75 points or 0.82 per cent to end at 24,609.70, as escalating US fiscal concerns and a credit rating downgrade sparked broad-based selling across Asian markets.

The selloff was triggered by mounting concerns over the proposed US budget bill that could significantly increase America’s national debt, pushing US Treasury yields higher due to tepid long-term bond demand. Adding to the pressure, a major credit rating agency’s downgrade of the US credit outlook intensified risk-off sentiment globally.

“The key benchmark indices witnessed declines amid US fiscal concerns that the proposed budget bill could significantly increase the national debt, pushing US treasury yield higher due to tepid long term bond demand,” said Vinod Nair, Head of Research at Geojit Investments Limited. “Adding to the pressure, a major credit rating agency’s downgrade of the US credit outlook sparked broad-based selloffs across Asian markets.”

The Sensex opened at 81,323.05 against its previous close of 81,596.63, while the Nifty opened at 24,733.95 compared to its previous close of 24,813.45. Both indices remained under pressure throughout the session, though they managed to recover from their intraday lows in the final hours of trading.

Among individual stocks, IndusInd Bank emerged as the top gainer on the Nifty 50, rising 1.76 per cent to close at 783.50. JSW Steel followed with a gain of 0.71 per cent to 1,008.00, while Bajaj Auto advanced 0.65 per cent to 8,744.00. Bharti Airtel and Hero MotoCorp also posted modest gains of 0.47 per cent and 0.19 per cent respectively.

On the losing side, ONGC led the declines, falling 2.65 per cent to 242.10. Mahindra & Mahindra dropped 2.42 per cent to 3,016.00, while Hindalco declined 2.03 per cent to 649.55. IT major Wipro fell 1.94 per cent to 246.05, and retail giant Trent lost 1.79 per cent to close at 5,346.00.

Sectoral performance was largely negative, with defensive and rate-sensitive sectors bearing the brunt of the selling pressure. Nifty FMCG declined 1.44 per cent, IT fell 1.31 per cent, and Consumer Durables dropped 1.14 per cent. Banking counters showed relative resilience, with Nifty Bank falling a modest 0.24 per cent to 54,941.30 and Nifty Private Bank declining 0.22 per cent.

“Indian benchmark indices opened on a negative note due to weak global cues, remained under pressure throughout the day, and ultimately settled on a negative note at 24,610,” said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd. “The volatility index, India VIX, cooled off by 1.65 per cent to 17.26, indicating a drop in market volatility.”

The broader market outperformed frontline indices, with the BSE Midcap index declining 0.3 per cent and the BSE Small Cap index managing a marginal gain of 0.17 per cent. The Nifty Next 50 fell 0.33 per cent to 66,716.90, while Nifty Financial Services dropped 0.43 per cent to 26,225.95.

Foreign institutional investors continued their selling spree, offloading equities worth ₹5,045.36 crore on a net basis, while domestic institutional investors provided support by purchasing stocks worth ₹3,715.00 crore net.

Currency markets also felt the pressure, with the rupee depreciating significantly against the US dollar. “Rupee traded very weak, depreciating by 42 paise to close at 85.92 against the US dollar, as FII activity remained mixed with both inflows and outflows observed over the past few days,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Gold prices, however, rallied on safe-haven demand, rising over ₹800 to reach ₹96,400 on the MCX, supported by a sharp decline in the US Dollar Index and renewed concerns over US debt sustainability. “Gold prices traded positive, rising over ₹800 to reach ₹96,400 on the MCX, supported by a sharp decline in the U.S. Dollar Index and renewed concerns over U.S. debt sustainability,” Trivedi added.

Technical analysts remained cautious about the near-term outlook. “The Nifty slipped due to global weakness, following new tax bill discussions by the U.S. President,” said Rupak De, Senior Technical Analyst at LKP Securities. “The very short-term trend remains weak, and the Nifty may continue to correct as long as it stays below 24,800.”

Market participants noted that the decline was primarily driven by weak global sentiment, particularly from US markets, in the absence of any significant domestic triggers. “Markets edged lower after a brief respite, losing nearly a percent, weighed down by weak global cues,” said Ajit Mishra, SVP Research at Religare Broking Ltd.

Despite the sharp correction, some analysts viewed the decline as a natural consolidation after recent gains. “While today’s fall is significant, it’s important to view it in context — Indian equities have had a strong run in recent months, and intermittent corrections are natural in a bull cycle,” said Pranay Aggarwal, Director & CEO of Stoxkart.

In the broader market, 2,275 stocks declined while 1,661 advanced on the BSE, with 150 remaining unchanged. A total of 82 stocks hit 52-week highs while 34 touched 52-week lows, and six stocks hit the lower circuit.

Looking ahead, market experts expect continued volatility in the near term. “Despite a notable improvement in India’s PMI in May and uptick in fiscal scenario, ongoing uncertainty around US-India trade negotiations and persistent global market volatility are likely to keep Indian equities in a consolidation phase in the near term,” Nair cautioned. The Nifty is expected to trade in a range of 24,400-25,000 levels in the immediate short term, with key support placed around the 21-day EMA near 24,445.