US fiscal fears rattle Dalal Street; Nifty slips under 24,650, Sensex sinks 645 pts

Business Standard

22-05-2025

The domestic equity benchmarks ended sharply lower today, echoing a global selloff triggered by rising bond yields and renewed fiscal concerns in major economies. The Nifty closed below the 24,650 mark, with IT stocks leading the decline on heightened fears surrounding the U.S. fiscal outlook. FMCG and energy stocks also came under pressure. Adding to the volatility was the Niftys weekly expiry, often a catalyst for exaggerated intraday swings.
The selloff was fueled by surging U.S. Treasury yields after a weak $16 billion auction of 20-year bonds, signaling poor investor appetite. This came amid progress on Trumps proposed spending and tax bill, expected to balloon the U.S. deficit. Moodys recent downgrade of the U.S. credit outlook further spooked global markets. Meanwhile, Japan's 40-year bond yield jumped to 3.5%, highlighting fiscal strain in an aging economy. As global yields rise and central banks hold firm on rates, risk sentiment has soured, prompting investors to pull back from equities worldwide.
The S&P BSE Sensex tanked 644.64 points or 0.79% to 80,951.99. The Nifty 50 index tumbled 203.75 points or 0.82% to 24,609.70.
Mahindra & Mahindra (down 2.59%), Reliance Industries (down 1.36%) and Infosys (down 1.21%) were major drags.
In the broader market, the S&P BSE Mid-Cap index declined 0.33% and the S&P BSE Small-Cap index rose 0.17%.
The market breadth was negative. On the BSE, 1,741 shares rose and 2,178 shares fell. A total of 167 shares were unchanged.
The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, fell 1.65% to 17.26.
Economy:
India's private sector activity witnessed a notable acceleration in May, as indicated by the HSBC Flash India Composite Output Index, which rose to 61.2 from 59.7 in April. The seasonally adjusted index, tracking month-on-month changes in output across both manufacturing and services, signaled a sharp rate of expansion.
Meanwhile, the HSBC Flash India Manufacturing PMI remained largely stable, edging up slightly to 58.3 in May from 58.2 in April. The reading continued to reflect a strong improvement in the overall health of the manufacturing sector. In contrast, the HSBC Flash India Services PMI Business Activity Index surged to 61.2 from 58.7, while the HSBC Flash India Manufacturing PMI Output Index dipped marginally to 61.4 from April's 61.9.
Numbers to Track:
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 86.0100 compared with its close of 85.5900 during the previous trading session.
MCX Gold futures for 5 June 2025 settlement rose 0.09% to Rs 95,709.
The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.19% to 99.79.
The United States 10-year bond yield shed 0.30% to 4.583.
In the commodities market, Brent crude for June 2025 settlement fell 90 cents or 1.39% to $64.01 a barrel.
Global Markets:
Markets across Europe and Asia slid on Thursday, echoing overnight losses on Wall Street. Investor sentiment soured as concerns mounted over the U.S.s ballooning deficit, especially with a new budget bill poised to deepen fiscal strain, a key factor behind Moodys recent downgrade of the countrys credit outlook.
The U.S. House of Representatives is expected to vote soon on a sweeping tax-and-spending bill, following its approval by a Republican-led committee. The legislation aims to extend the 2017 Trump-era tax cuts and is projected by the Congressional Budget Office to add $3.8 trillion to the already massive $36.2 trillion U.S. debt over the next decade.
In Japan, economic concerns also weighed in. The manufacturing sector contracted for the 11th consecutive month in May, with the au Jibun Bank flash manufacturing PMI inching up to 49.0 from Aprils 48.7, still below the 50 threshold that signals growth.
On Wall Street, all major indices ended sharply lower Wednesday. The Dow fell 1.91%, the S&P 500 dropped 1.61%, and the Nasdaq lost 1.41%, driven by a spike in Treasury yields. Investors are wary that the proposed U.S. bill could worsen fiscal pressures, especially as internal resistance builds within the Republican party. Estimates suggest the bill could add between $3 trillion and $5 trillion to national debt.
The combination of rising borrowing costs and long-term fiscal uncertainty is now casting a global shadow on equity markets.
In corporate news, Alphabet Inc. shares rose more than 2% following the company's announcement of new AI-related products and initiatives aimed at maintaining its competitive edge in the sector.
Microsoft Corporation traded slightly lower after disclosing that approximately 394,000 Windows devices worldwide had been infected by the Lumma malware.
Stocks in Spotlight:
Bajaj Auto rose 0.48%. The auto major has announced a strategic step to gain majority control in KTM AG, the Austrian motorcycle manufacturer, through its wholly owned subsidiary, Bajaj Auto International Holdings BV (BAIHBV). To revive the struggling Austrian brand, Bajaj has arranged a comprehensive 800 million euros funding package. The move aims to support KTM's ongoing restructuring and ensure its operational continuity amid financial distress.
Colgate Palmolive (India) tanked 6.47% after the companys standalone net profit declined 6.53% to Rs 355 crore in Q4 FY25 as against Rs 379.82 crore in Q4 FY24. Revenue from operations fell 1.93% year on year (YoY) to Rs 1,452 crore in the quarter ended 31 March 2025.
Oil and Natural Gas Corporation (ONGC) declined 2.89% after the companys standalone net profit fell 34.66% to Rs 6,448.28 crore in Q4 FY25 as against Rs 9,869.37 crore posted in Q4 FY24. Revenue from operations declined marginally to Rs 34,982.23 crore in Q4 FY25, compared to Rs 34,636.69 crore reported in Q4 FY24.
H.G. Infra Engineering dropped 6.49% after the company reported 22.65% decline in consolidated net profit to Rs 146.98 crore in Q4 FY25 as against Rs 190.03 crore posted in Q4 FY24. Revenue from operations fell 20.33% YoY to Rs 1,360.89 crore in the quarter ended 31 March 2025.
Rupa & Company rose 2.82% after the company's net profit rose 26% to Rs 30.6 crore while net sales rose 4% to Rs 415.5 crore in Q4 March 2025 over Q4 March 2024.
Astral jumped 4.76% after its standalone net profit jumped 3.76% to Rs 190 crore on 3.64% rise in revenue from operations to Rs 1,542.3 in Q4 FY25 over Q4 FY24.
IndusInd Bank added 1.82%. The bank reported a standalone net loss of Rs 2,235.99 crore in Q4 FY25 as against a net profit of Rs 2,346.84 crore posted in Q4 FY24. Total income declined 22.83% year on year to Rs 11,342.65 crore in the quarter ended 31 March 2025.
Aditya Birla Fashion and Retail (ABFRL) corrected 66.62% to settle at Rs 89.85 as the stock turned ex-demerger following the spin-off of its lifestyle brands business into a separate listed entity, Aditya Birla Lifestyle Brands (ABLBL). As per the approved 1:1 share entitlement ratio, existing ABFRL shareholders will receive one share of ABLBL for every ABFRL share they hold.
Dishman Carbogen Amcis surged 11.32% after the company reported consolidated net profit of Rs 43.09 crore in Q4 March 2025 as against net loss of Rs 69.92 crore in Q4 March 2024. Consolidated net sales rose 9.41% year-on-year to Rs 716.34 crore in Q4 March 2025.
IPO Update:
The initial public offer of Belrise Industries received bids for 50,55,27,270 shares as against 17,70,58,824 shares on offer, according to stock exchange data at 16:45 IST on 22 May 2025. The issue was subscribed 2.86 times.
The issue opened for bidding on 21 May 2025 and it will close on 23 May 2025. The price band of the IPO is fixed between Rs 85 and 90 per share. An investor can bid for a minimum of 166 equity shares and in multiples thereof.
Borana Weaves' IPO received bids for 54,79,20,720 shares as against 36,89,457 shares on offer, according to stock exchange data at 16:45 IST on 22 May 2025. The issue was subscribed 148.51 times.
The issue opened for bidding on 20 May 2025 and it will close on 22 May 2025. The price band of the IPO is fixed between Rs 205 and 216 per share. An investor can bid for a minimum of 69 equity shares and in multiples thereof.