As per provisional closing, the S&P BSE Sensex plunged 1,258.12 points or 1.59% to 77,964.99. The Nifty 50 index tumbled 388.70 points or 1.62% to 23,616.05.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 2.44% and the S&P BSE Small-Cap index slipped 3.17%.

The market breadth was weak. On the BSE, 657 shares rose and 3,472 shares fell. A total of 117 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, jumped 15.58% to 15.65.

The Indian rupee hit a fresh record low against the US dollar on Monday. The currency opened at 85.7700, touched a fresh all-time low of 85.8425 and is currently trading at 85.8300.

Economy

The seasonally adjusted HSBC India Services Business Activity Index rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months.

At 59.2 in December, up from 58.6 in November, the HSBC India Composite Output Index signaled the strongest rise for four months. Private sector companies in India posted a faster increase in output at the end of the calendar year. The acceleration was driven by service providers, who recorded a quicker increase in business activity when factory production growth softened.

Ines Lam, economist at HSBC, said: 'India's service companies expressed strong optimism in December as business activity growth surged to a four-month high. Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future. The easing of input price inflation in the month also supported business sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry.'

Meanwhile, India's foreign exchange (forex) reserves declined by $4.112 billion to an eight-month low of $640.279 billion during the week ended December 27, according to the latest RBI data.

For the week ending December 27, foreign currency assets, a major component of the reserves, decreased by $4.641 billion to $551.921 billion.

Gold reserves increased by $541 million to $66.268 billion during the week. The special drawing rights (SDRs) were down by $12 million to $17.873 billion, according to the RBI.

India's reserve position with the IMF was unchanged at $4.217 billion in the reporting week, the apex bank data showed.

Buzzing Index:

The Nifty PSU Bank index slipped 3.79% to 6,367.85. The index rose 1.94% in the past four trading sessions.

Union Bank of India (down 7.53%), Bank of Baroda (down 5.66%), Bank of India (down 4.69%), Bank of Maharashtra (down 4.59%), Indian Overseas Bank (down 4.54%), Punjab & Sind Bank (down 4.53%), Punjab National Bank (down 4.38%), UCO Bank (down 4.34%), Canara Bank (down 4.06%) and Central Bank of India (down 3.61%) edged lower.

Union Bank of India tumbled 7.70% after the public lender reported a 2.36% decline in domestic deposits to Rs 11,82,623 crore as of 31 December 2024 as against Rs 12,11,178 crore posted as of 30 September 2024.

Bank of Baroda tumbled 5.69%. The company said that its domestic deposits increased 9.23% to Rs 11,65,874 crore as on 31st December 2024 as compared with Rs 10,67,371 crore as on 31st December 2023.

Bank of India slipped 4.72%. The company informed that its domestic deposits increased 13.26% to Rs 6,78,626 crore as on December 2024 compared with Rs 5,99,137 crore posted in December 2023.

Stocks in Spotlight:

Mehai Technology hit an upper circuit of 2% after the company announced that it has received an order worth Rs 84.57 crore from Leapfrog Engineering Services for a water transmission project in Bahrain, a Middle East country.

Marico declined 1.94% after the company said that the rising trend in input costs is expected to result in a higher-than-anticipated gross margin contraction on a year-on-year basis.

Metropolis Healthcare shares climbed 2.67% after the company announced double-digit revenue growth for Q3FY25, despite it being a seasonally slow period for diagnostics.

Page Industries shed 0.30%. The company informed that its board has approved the appointment of Karthik Yathindra as chief executive officer (CEO) of the company with effect from 1 April 2025.

Gensol Engineering added 1.44% after the firm secured a contract from a public sector undertaking for the development of a solar PV project in Gujarat worth Rs 1061.97 crore.

Premier Explosives dropped 8.68% after the company informed that a fire accident occurred on 4 January 2025, at its factory located in Peddakandukur village, Yadadri Bhuvanagiri District, Telangana.

FSN E-Commerce Ventures (Nykaa) gained 2.53% after the firm stated that it has witnessed a strong performance with consolidated net revenue growth likely to be higher than mid-twenties in the third quarter of FY25.

Kotak Mahindra Bank slipped 3.32% after Milind Nagnur, chief operating officer (COO) and chief technology officer (CTO) of the bank, tendered his resignation from the services of the bank due to personal reasons.

HDFC Bank declined 2.14%. The company's average deposits stood at Rs 24,52,700 crore as of 31st December 2024, registering the growth of around 15.9% as compared with Rs 21,17,100 crore as of 31st December 2023

Global Markets:

Most European markets traded higher on Monday as investors sought more clues about the direction of the global economy.

Asian equities ended mixed, despite China's services sector expanding in December at the fastest pace in seven months, driven by robust domestic demand. The Caixin services PMI surged to 52.2, exceeding both market expectations of 51.4 and the November reading of 51.5.

In South Korea, a court dismissed an appeal by lawyers of impeached President Yoon Suk Yeol against an arrest warrant, according to a local media report Sunday.

Investor sentiment remains mixed after a turbulent end to 2024. While anticipated monetary policy easing and the potential of artificial intelligence to drive growth remain supportive factors, the threat of escalating US-China trade tensions could derail any market rally. Investors are also closely monitoring Beijing for further stimulus measures.

US tech stocks staged a strong rebound on Friday, recovering from the losses seen in the final week of 2024. Investors had capitalized on the year-end rally, a period often characterized by positive market movements known as the Santa Rally.

On Friday, the Dow Jones Industrial Average rose 0.8% to 42,732.13, the S&P 500 gained 1.3% to 5,942.47, and the NASDAQ Composite surged 1.8% to 19,621.68.

This week will feature a shortened trading schedule as the New York Stock Exchange will be closed on Thursday to honor the passing of former President Jimmy Carter.

The minutes from the Federal Reserve's December 17-18 meeting, scheduled for release on Wednesday, will provide further insights into the Fed's interest rate outlook. Recent statements have indicated a more cautious approach to rate cuts this year due to persistent inflation and a resilient economy.

The US December jobs report is due on Friday.

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