Indian markets slip 1% amid global jitters, FMCG index declines 1.5%

Weakness in finance stocks, nervousness ahead of Q3 results, valuation concerns weigh on sentiment

Indian equities snapped their two-day winning streak on Monday amid a retreat in the global markets as the 10-year US bond yields once again surpassed the 4 per cent level.

A decline in financial and consumer stocks and nervousness ahead of the results season, which starts this week, also weighed on sentiment.

The Sensex ended the session at 71,355, a decline of 671 points or 0.9 per cent. Nifty declined 198 points or 0.9 per cent to end the session at 21,513.

HDFC Bank, which declined 1.1 per cent, ICICI Bank, which fell 1.2 per cent and ITC, which slipped 1.8 per cent, were the biggest contributors to the Sensex’s southward move.

The BSE fast-moving consumer goods (FMCG) index declined 1.5 per cent. This came as business performance of companies for the December quarter showed that private consumption remained sluggish.

Marico declined 4 per cent after the company, in an exchange filing, said domestic volumes grew in low-single digits on a year-on-year (Y-o-Y) basis, and rural markets offered little cheer.

Analysts said equity markets showed weakness after making double-digit gains in 2023.

The outlook for a rate cut by the Federal Reserve in March is getting blurred as the labour market continues tight. The strong job numbers in the US led to a rally in bonds in the US.

The 10-year US bond yield rose, trading at 4.06 per cent on Monday. 

“Better-than-expected US job data last Friday led to the concerns that the Fed may delay the rate cut. This led to a rise in the dollar index along with the 10-year bond yield. Thus, overall sentiments are currently subdued in the market and could lead to more consolidation over the next few days. The inflation data from the US, China and India due this week will be of key importance,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

Equity markets rallied in the previous year on the hope of the Federal Reserve cutting interest rates by March, robust macro and corporate earnings and hopes of policy continuity after the general elections in May 2024.  

Among peer markets, Hang Seng declined 2.02 per cent amid a sell-off in technology shares and concerns among investors about the economic revival.

The December quarter earning announcements and key macro data from India and abroad will determine the market trajectory.

This week will see the release of India's retail inflation and industrial production data. Investors will be keenly tracking US inflation and initial jobless claims, industrial production data from the UK, and statements of US Federal Reserve officials.

“In the near term, investors' trade positions will be more inclined towards the upcoming results season. While the outset may be tempered by lower expectations in the IT sector, the overall forecast for earnings growth remains optimistic, projecting double-digit figures,” said Vinod Nair, head of research of Geojit Financial Services.

The market breadth was weak, with 1,855 stocks advancing and 2,123 declining.

Foreign portfolio investors (FPIs) were net buyers worth Rs 16 crore, and their domestic counterparts bought shares worth Rs 156 crore, according to provisional data from the exchanges.