Stocks Bleed as US Yields Soar, Rate Cut Hopes Thin

US jobs data spooks market; Frontline stocks, mid- & small-caps hit, rupee tumbles

- Dipti Sharma

Fears over fewer rate cuts in the US and a greenback gathering steam sent shockwaves over the Street on Monday, making investors poorer by more than ₹12 trillion overnight.

The carnage did not spare any corner of the market—while the Nifty and Sensex plunged 1.5% and 1.4% to close at seven-month lows of 23,085.95 and 76,330.01 points, the broader market fared worse, with Nifty's mid-cap and small-cap indices plunging 4% each to hit seven-month lows of 52390.4 and 16159.9 points.

The rupee wasn't spared either, slipping below the 86-mark for the first time. The local currency lost 0.7% or 56 paise—its single-biggest decline in two years—to close at a record low of 86.57 to the dollar.

Weak corporate earnings could make matters worse.

"The market in 2025 will be a story of two halves," said Ashish Gupta, chief investment officer of Axis Mutual Fund, with the first half more challenging due to an earnings slowdown. "It is likely that earnings growth will only be about 5%, and multiple sectors, such as auto, banks and cement will be affected. If you look at the global commodity sector like oil, gas, and metals, all these will be reporting flat to negative earnings growth. So, while valuations of many of these sectors, particularly financials, are quite attractive, we will not have earnings growth supporting them."