Indian stocks decline sharply, weighed by banking indices

NEW DELHI: Indian stock indices slumped sharply during Wednesday's trade, weighed by a sharp decline in all sectoral indices.

Banking and financial stocks were the top losers, with Nifty bank, Nifty financial services, Nifty PSU bank, and Nifty private bank declining the most.

They declined in the range of 2.1-3.6 per cent. Accordingly, Sensex closed at 60,205.06 points, down 773.69 points or 1.27 per cent, whereas Nifty closed at 17,891.95 points, down 226.35 points or 1.25 per cent.

The subdued market sentiment is due to the possibility of slowing global economic growth this year and the latest pulling out of funds by foreign portfolio investors (FPIs) from Indian stocks.

Foreign portfolio investors (FPIs) have sold assets worth about Rs 16,766 crore in Indian stock markets so far in 2023, the latest data from National Securities Depository showed.

"Indian equities witnessed significant sell-off as the market appeared apprehensive ahead of the upcoming Union Budget and Fed meeting next week.

Sentiments were dampened by persistent FII selling, where funds are being shifted to other emerging markets as a result of attractive valuations," said Vinod Nair, head of research at Geojit Financial Services.

Furthermore, a weak economic growth outlook that stoked recession fears pulled down global markets," said Nair. Going ahead, for fresh cues, investors would keep an eye on the upcoming Union Budget for 2023-24, slated to be presented on February 1.

On Wednesday, the rupee closed largely steady at 81.64 versus the US dollar. "Rupee will be in a volatile range now between 81.25-81.85 until the Budget and Fed's policy rate decision along with statements come across on 1st Feb," said Jateen Trivedi, VP and research analyst at LKP Securities.