The BSE Sensex witnessed a steep fall on January 13, 2025, declining by 1% or 770 points by 1:16 PM. The market sentiment was dented by a stronger-than-expected US jobs report, which reduced hopes of early interest rate cuts by the Federal Reserve. Coupled with concerns over slowing corporate earnings, the market began the week on a bearish note.

Market Capitalisation Erodes by ₹5.04 Lakh Crore

The downturn has had a pronounced impact on investor wealth, with the total market capitalisation of all BSE-listed companies plunging by ₹5.04 lakh crore to ₹224.63 lakh crore. This marks a significant erosion of value, reflecting the widespread selling pressure.

Advance-Decline Ratio Favors Declining Stocks

The market breadth tilted heavily towards declining stocks. Out of the 30 stocks in the Sensex, 25 were trading in red, leaving only 5 in green. Despite the overall weakness, TCS and Axis Bank emerged as top performers, both gaining over 1% as of 1:16 PM.

Foreign Outflows and Rupee Depreciation Compound Woes

A significant factor behind the market turmoil is the heavy selling by Foreign Institutional Investors (FIIs). Although Domestic Institutional Investors (DIIs) attempted to counterbalance the outflows, their efforts failed to stem the market’s slide.

The rupee’s sharp depreciation to a record low on January 13 exacerbated the situation. A weakening rupee inflates import bills, particularly oil prices, which amplifies inflationary pressures domestically. For FIIs, the declining rupee reduces rupee-denominated returns, making Indian markets less attractive and prompting further outflows.

Ripple Effect on the Economy

The depreciation of the rupee creates a cascading impact on the economy. Higher import costs increase inflationary pressures, affecting industries reliant on imported raw materials. Moreover, rising oil prices strain both the economy and consumer spending.

Sensex Performance in January 2025

So far in January as of January 13, 2025, the Sensex has declined by 2.05%. 

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