Indian stock markets experienced a significant drop on Friday, marking the fifth consecutive day of downturn. This decline aligns with the persistence of a strong U.S. dollar and elevated U.S. Treasury yields due to the anticipation of extended high interest rates in the United States.
Globally, market sentiment remained precarious following the Federal Reserve's cautious indication regarding potential monetary easing in 2025. Additionally, solid U.S. economic data published recently has bolstered the Fed's assertive approach.
Further dampening investor confidence was the U.S. government shutdown, prompted by President-elect Donald Trump's unexpected dismissal of a bipartisan proposal.
The threat of tariffs also weighed heavily on market participants, as Trump cautioned that tariffs could be imposed on the European Union unless the bloc moves to reduce its trade deficit with the U.S. by engaging in substantial oil and gas transactions with America.
In response, India's benchmark S&P/BSE Sensex index dropped by 1,176.45 points, or 1.49 percent, arriving at 78,041.59, driven by selling pressure on large-cap stocks amid ongoing foreign institutional investor liquidation.
The NSE Nifty index also declined, closing at 23,587.50—a decrease of 364.20 points, or 1.52 percent, from its previous session's close. The sell-off was widespread, impacting stocks such as Trent, Mahindra & Mahindra, IndusInd Bank, Axis Bank, and Tech Mahindra, which fell between 3 to 4 percent within the Nifty collection.
