Stock Market Today: Sensex, Nifty decline 1% each on concerns over higher US deficit

By | May 22, 2025

On Thursday, May 22, 2025, Indian stock markets dropped sharply, with the BSE Sensex falling over 1,000 points and the NSE Nifty 50 sliding by more than 1%. Investors reacted to growing concerns about the rising US fiscal deficit and increasing bond yields, which sparked a global risk-off sentiment.

Market Overview

  • Sensex lost approximately 1,107 points, or 1.4%, closing near 80,489.92.
  • Nifty 50 declined by 1.21% to end the session at 24,513.50.

This broad-based decline affected major sectors across the market.

Key Factors Behind the Decline

1. US Fiscal Deficit Concerns

Investors grew increasingly worried about the sustainability of the US fiscal deficit. Recent data showed a higher-than-expected deficit, triggering fears about potential economic instability. This fear pushed investors away from riskier assets and into safer options.

2. Rising US Bond Yields

The US bond market experienced a sell-off, which caused yields to surge. Higher yields offered better returns, making government bonds more attractive than equities. This shift led to a global equity sell-off, impacting Indian markets as well.

3. Weak Global Cues

Global markets faced pressure due to the combination of US fiscal concerns and rising bond yields. Investors worldwide adopted a cautious approach, which affected Indian equities too.

Sectoral Impact

Information Technology (IT): The IT sector suffered significant losses, with the Nifty IT index dropping over 1%. Stocks like Tech Mahindra, Wipro, and Persistent Systems declined sharply amid the broader sell-off.

Banking and Financial Services: Major banks also fell, as investors worried about global economic stability and potential impacts on financial markets.

Consumer Goods and Pharmaceuticals: Companies like ITC, Hindustan Unilever, and Sun Pharma saw share prices decline, as investors became cautious ahead of their earnings announcements.

Global Market Influence

The Indian market’s fall mirrored a global trend. Investors worldwide sold off equities amid rising concerns over the US fiscal deficit and bond yields. European stocks declined, and Asian markets showed mixed reactions, highlighting how interconnected the global financial system has become.

Expert Opinions

Financial analysts said the current market volatility reflects reactions to macroeconomic signals, especially those from the US. They pointed out that the combination of a high fiscal deficit and rising bond yields signals potential economic challenges ahead.

Investor Outlook

Experts advised investors to remain cautious in the short term due to ongoing uncertainties. However, some believe this market correction could create buying opportunities for long-term investors, especially in fundamentally strong sectors.

Conclusion

The sharp drop in India’s Sensex and Nifty underscores how global economic factors influence domestic markets. As concerns about the US fiscal deficit and bond yields continue, investors should stay informed and adopt a balanced investment strategy.