Sensex Slumps 560 Points on Fed Pause, Rupee Weakness, Pre-Budget Caution
Benchmark equities opened weak on Tuesday and extended losses as global caution and domestic uncertainty weighed on investor sentiment.
At 10:10 am, the Sensex fell 560 points (0.7%) to 81,784, while the Nifty dropped 158 points to 25,184. Major sectors came under pressure as investors reduced exposure across the board.
Fed Decision Dampens Risk Appetite
A key trigger was the US Federal Reserve’s decision to hold rates steady at 3.5–3.75%, signaling that rate cuts are unlikely soon. The move strengthened the dollar and pushed US bond yields higher, prompting foreign investors to withdraw funds from emerging markets like India. Global markets reacted cautiously, adding to domestic selling pressure.
Foreign Outflows and Weak Rupee Add Pressure
Foreign portfolio investors (FPIs) have been net sellers in recent sessions, and continued outflows weighed on equities. The rupee hovered near record lows against the dollar, increasing risk perceptions and affecting sectors reliant on overseas funding. Financials, IT, and other FPI-heavy stocks bore the brunt of the selling, while mid- and small-cap indices underperformed.
Pre-Budget Caution
With the Union Budget and Economic Survey scheduled this week, domestic investors trimmed positions rather than take bets. Uncertainty over taxation, fiscal consolidation, disinvestment, and spending priorities kept markets volatile, with many choosing to lock in recent gains.
Weak Q3 Earnings
Corporate earnings for the December quarter were mixed. While some sectors performed well, others missed expectations, reinforcing cautious sentiment.
Outlook
Analysts say the decline reflects sentiment rather than fundamentals. Until the Fed clarifies its policy path and the Union Budget provides direction, markets are likely to remain choppy and volatile.
For now, a combination of global uncertainty, FPI outflows, a weak rupee, and pre-Budget caution is keeping the Sensex under pressure.
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