Domestic Equity Bourses Face Challenges Amid Global Uncertainty

Despite the optimism sparked by impressive Q2FY24 results, domestic indices witnessed a significant downturn brought on by weak global cues with a heavy sell-off due to a sharp rise in US Treasury yields.

Indian frontline indices faced a substantial decline over the last fortnight, driven by weak global cues, even as investors digested concerns stemming from the Israel-Palestine conflict. Furthermore, the benchmark 10-year US Treasury bond yields climbed above the 5 per cent mark for the first time since 2007, reaching a 16-year high. This surge was a result of the Federal Reserve’s reaffirmation of its aggressive stance and its plan for additional interest rate hikes this year, which triggered significant sell-offs in most global markets. Over the last fortnight, FIIs registered an outflow of Rs15,986.09 crore, while DIIs provided considerable market support with a notable inflow of Rs15,064.31 crore. 

However, the BSE Sensex and Nifty 50 ended the two-week period with losses of 3.77 and 3.56 per cent, respectively. Meanwhile, the broader indices, BSE Midcap and BSE Smallcap index, experienced even more pronounced losses but were able to mitigate some of their declines, ultimately closing 3.69 and 3.40 per cent lower, respectively. The investor pessimism was evident across the sectoral front with all the sectoral indices ending the period in the red territory. The BSE Auto and BSE Fast-moving Consumer Goods sectors were the least affected, showing resilience amidst the market downturn, boosted by heightened optimism driven by the festive season and increased demand.