By Bharath Rajeswaran
(Reuters) – Indian shares fell on Monday, with HDFC Bank and Reliance leading the losses, after an unexpectedly strong U.S. jobs report signalled fewer rate cuts by the Federal Reserve amid persistent worries over slowing domestic earnings.
The Nifty 50 fell 0.86% to 23,232.25 points as of 10:01 a.m. IST, while the BSE Sensex shed 0.84% to 76,726.42.
All 13 major sectors declined. The broader, more-domestically focussed small- and midcaps lost 1.5% each.
HDFC Bank and oil-to-telecom conglomerate Reliance Industries – the two heaviest stocks on the benchmarks – declined 1.9% and 0.8%, respectively.
Data on Friday showed that U.S. jobs growth unexpectedly accelerated last month, lifting U.S. 10-year Treasury yields to 14-month highs and increasing the likelihood of fewer Fed rate reductions in 2025. This could make emerging markets, such as India, less attractive for investment.
“Markets will continue to be under pressure from the many strong headwinds. The blowout jobs data from the U.S. means that the Fed rate cut expectations in 2025 is now down to one,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Markets expect the Fed to cut rates by only 25 basis points this year, according to CME FedWatch tool.
“With the rise in U.S. bond yields, foreign selling in Indian markets will continue, adding to pressure on domestic equities,” Vijayakumar said.
The prospect of fewer U.S. rate cuts has spurred foreign outflows aggregating to 213.57 billion rupees ($2.5 billion) so far in January.
Both the Nifty 50 and BSE Sensex lost about 2.4% last week, with analysts saying that worries over a moderation in third-quarter earnings was also weighing on investor sentiment.
Among individual stocks, D-mart operator Avenue Supermarts lost 3.5% after analysts flagged pressure on the company’s operating profit margins after its third-quarter results.
In contrast, drugmaker Biocon rose 4% after BofA Securities reiterated its “buy” rating, citing gains from the U.S. drug regulator’s clearance of some of the company’s facilities.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema and Sumana Nandy)
