In a tumultuous trading session on December 17, the Sensex plummeted over 900 points while the Nifty slid below the 24,400 mark, driven by investor caution ahead of the critical US Federal Reserve meeting. The stock market downturn was led by financials, oil, and gas stocks, reflecting a global sentiment of uncertainty as traders anticipated the Fed’s rate decision.
Investors are now fixated on the Federal Reserve’s December 18 decision, where a 25-basis-point rate decrease is highly probable, with the CME FedWatch tool indicating a 97% likelihood. This decision could set the tone for global markets, influencing liquidity and risk appetite.
Domestically, the India VIX, a measure of market volatility, surged by over 6% to 14.8, highlighting heightened investor concern. At 01:30 p.m., the Sensex had dropped 974 points to 80,777, and the Nifty was down 304 points at 24,364. Heavyweight stocks such as HDFC Bank, RIL, and ICICI Bank contributed significantly to the declines, dragging market sentiment lower.
Stock Market Breadth and Sector Performance
Srock Market breadth reflected the bearish sentiment, with 1,502 shares advancing, 1,822 declining, and 93 remaining unchanged. The financial and oil & gas sectors bore the brunt of the sell-off, with HDFC Bank, ICICI Bank, ONGC, and BPCL registering notable losses.
HDFC Bank shares, in particular, declined 0.8% after SEBI issued a warning over its non-compliance with disclosure norms regarding a senior employee’s resignation. Similarly, the Nifty Oil & Gas index fell 0.4%, weighed down by a broader sectoral slump.
However, amidst the widespread decline, the Nifty Media index bucked the trend, rising over 1%. Stocks like PVR Inox, Zee Entertainment, and Nazara Technologies gained between 1-4%, providing a glimmer of positivity in an otherwise lackluster session. Additionally, Piramal Pharma saw a 3% rise after JM Financial initiated coverage with a “Buy” recommendation.
Technical Analysis: Key Levels to Watch
From a technical perspective, the Nifty faces stiff resistance at 24,800, followed by a crucial barrier at 25,000, according to Hardik Matalia, Derivative Analyst at Choice Broking. A breakout above these levels could signal further gains, while immediate support levels lie at 24,550 and 24,400.
Traders are advised to adopt a “buy-on-dips” strategy, provided the index holds above these support levels. Maintaining a strict stop-loss at 24,200 on a closing basis can help manage risk effectively.
Stock Market: Domestic and Global Cues
The broader domestic indices, including the BSE Midcap and Smallcap, showed resilience, edging up 0.1%. However, the previous session’s sell-off in IT and metal sectors, coupled with net selling by FIIs and DIIs to the tune of Rs 278.7 crore and Rs 234.25 crore respectively, added to the cautious sentiment.
Globally, the Nasdaq reached a record high on December 16, while the S&P 500 also posted gains. The Asia-Pacific markets mirrored Wall Street’s cautious optimism. Beyond the Fed meeting, market participants are eyeing the Bank of Japan’s policy review on December 19 and the People’s Bank of China’s lending prime rate announcement on December 20 for additional cues.
Stock Market: Expert Insights and Outlook
“The stock market will remain subdued as most fund managers are away for the holiday season, and this trend is likely to persist until year-end,” said Vinit Bolinjkar, Head of Research at Ventura Securities. He highlighted falling inflation in India as a positive factor, with the recent CRR cut by the RBI potentially paving the way for further rate reductions.
Bolinjkar expressed optimism about public sector banks and housing finance companies, noting that lower rates could reduce long-term funding costs and ease deposit pressures. A global slowdown could also enable India to secure overseas funds more affordably, bolstering economic prospects.
Stock Market: Key Losers and Gainers
Among the top Nifty 50 losers were Shriram Finance, Bajaj Finserv, Grasim, RIL, and Bharti Airtel, which shed 1-3%. On the flip side, Cipla, Tata Motors, Bharat Electronics, Tech Mahindra, and Adani Ports gained between 0.3-2%, showcasing some resilience in select counters.
As the Fed meeting outcome draws closer, Indian markets are likely to remain volatile. Analysts suggest that the upcoming Q3 FY25 earnings season and the Union Budget will serve as major domestic catalysts in the coming months. For now, traders and investors are advised to tread cautiously, focusing on selective opportunities while maintaining robust risk management strategies.
In summary, the Sensex and Nifty’s sharp declines underscore the fragility of market sentiment in the face of global uncertainties. As the Fed’s rate decision unfolds, its implications on liquidity and investor confidence will be pivotal in shaping market dynamics in the near term.
