Indian Stock Market on 08.01.25

On Wednesday, the Indian markets managed to dodge a larger slump, thanks in part to the steady support from heavyweights like Reliance Industries. The oil and gas sector led the charge as crude prices edged higher, raising hopes that stronger margins for these companies could help offset the broader market weaknesses. Even as global cues painted a bleak picture—US tech stocks taking a hit overnight and concerns mounting over the US Federal Reserve potentially delaying rate cuts in 2025—the domestic market found a way to claw back from early losses.

At one point, the Nifty 50 was flirting with a drop below 23,500, but it recovered to end the session with a slight dip of 0.08%. The Sensex, which had plummeted over 700 points during the day, rebounded by 666 points to finish with a modest loss of 0.06%. While the recovery was encouraging, the overall sentiment remains fragile, still under the weight of global headwinds and local challenges.

In the bigger picture, the market is caught in a tricky spot. The FPI outflow has been relentless, with over ₹8,500 crore worth of Indian equities sold in January alone, as investors move towards the stronger US dollar and rising bond yields. The ongoing global weakness, fueled by stronger-than-expected US job numbers, has investors jittery about a delay in any rate cuts by the US Fed this year. While there are some hopes for a Q3 earnings recovery in India, experts remain cautious, noting that any clear revival may only surface in Q4.

For those keeping an eye on technicals, the Nifty 50’s movements from 23,500 to 24,700 and back to near 23,500 in the past two months have shown how volatile the market has been, largely driven by FPI selling. If the index falls below the 23,200 mark, there could be a sharp drop to levels around 21,800 to 21,500. So, even though there’s been some resilience in the face of negative sentiment, the outlook for the near term remains uncertain, and any break of key support levels could tip the scales toward further declines.