On December 17, 2024, the Indian stock market faced its second straight session of losses, with benchmark indices Sensex and Nifty50 dropping by 1% each. The decline was fueled by cautious investor sentiment ahead of the US Federal Reserve’s meeting and weak performance by major stocks like Reliance Industries and HDFC Bank.
Market Performance:
- Sensex: Dropped approx 1000 points (1%) to an intra-day low of 80,941.61.
- Nifty50: Declined 247.75 points (1%) to hit 24,420.5.
- Broader Markets: Outperformed benchmarks with Nifty Midcap and Nifty Smallcap indices falling only 0.06% each.
Reasons Behind the Market Decline
1. US Federal Reserve Meeting:
Investors are on edge ahead of the Federal Open Market Committee (FOMC) meeting on December 18, where the Fed is expected to announce a 25 basis point rate cut. The focus, however, will be on Fed Chair Jerome Powell’s commentary regarding future monetary policy. Any deviation from a dovish outlook could further dampen market sentiment.
2. India’s Trade Deficit:
The sharp spike in India’s November trade deficit to $37.8 billion has put downward pressure on the Indian rupee, pushing it closer to ₹85 per USD.
- Impact on Sectors:
- Exporters (IT and pharma): Likely to benefit from a weaker rupee.
- Importers: Face higher import costs, affecting profit margins.
3. Sectoral Weakness:
Key indices such as Nifty Bank, Nifty Financial Services, and Nifty Oil and Gas lost over 1%, while sectors like Nifty Auto, FMCG, IT, and Metal declined over 0.5%.
Top Stock Performers and Laggards
Sensex Constituents:
- Positive Performer: Adani Ports was the only gainer.
- Top Losers: HDFC Bank, Reliance Industries, ICICI Bank, Bharti Airtel, and L&T.
Nifty50 Constituents:
- Gainers: Adani Ports, Cipla, Adani Enterprises, and Tata Motors.
- Losers: Shriram Finance, Bajaj FinServ, Grasim, Bharti Airtel, and PowerGrid.
Sectoral Analysis
Sectors with Losses:
| Sector | Decline |
|---|---|
| Nifty Bank | Over 1% |
| Nifty Financial Services | Over 1% |
| Nifty Oil and Gas | Over 1% |
| Nifty Auto, FMCG, IT, Metal | Over 0.5% |
Sectors with Gains:
| Sector | Gain |
|---|---|
| Nifty Media | ~1% |
| Nifty Realty | ~1% |
Outlook for the Market
- Fed Commentary: Market movements hinge on the US Fed’s policy outlook. A dovish stance could stabilize investor sentiment.
- Trade Deficit Impact: Continued rupee depreciation may benefit exporters but hurt sectors reliant on imports.
- Sectoral Focus: Investors should monitor IT and pharma stocks for gains amidst a weaker rupee.
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