The Sensex dropped 1,500 points from its day’s high. The Nifty fell by 1.3% by mid-day on January 6, 2025. All sectors were in the red. Nifty Metal plunged 2.66% and Nifty PSU Bank declined 3.35%. The India VIX, or fear gauge, spiked by 10% due to concerns about corporate earnings and a weak external economic environment.
Experts say the sharp sell-off is due to a “sell-on-rally sentiment” driven by a strong U.S. dollar and high stock valuations. They expect markets to stay directionless until third-quarter earnings offer new clues. The Nifty 50 is in the oversold zone. It may slide towards 23,500, but could rally if it breaks past 24,800.
Investors are watching the Union Budget for 2025-26 and the RBI MPC meeting in February for guidance. Global factors like the US dollar index at 109 and the 10-year US bond yield at 4.62% impact market sentiment. Foreign portfolio investors may keep selling until yields decline and the dollar stabilizes.
