Mixed signals from Asia-Pacific markets and cautious outlook post-Fed rate decisions
Stock Market Update December 20, 2024 – The Indian equity markets displayed muted performance on Friday, navigating a mix of global cues and investor sentiment. The benchmark indices, BSE Sensex and Nifty 50, fluctuated between marginal gains and losses throughout the session.
Indices Movement
As of 11:00 AM, the BSE Sensex traded lower by 37 points (0.05%) at 79,181.05. The Nifty 50, however, edged up slightly by 5.95 points (0.02%) to 23,957.65. Early trading sessions witnessed only eight stocks from the Sensex basket trading in the green. TCS led the gainers with a rise of 1.67%, followed by Infosys, Tata Motors, Bharti Airtel, and HCLTech. On the losing side, Axis Bank declined by 1.19%, while JSW Steel, Power Grid Corp., ITC, and Mahindra & Mahindra also lagged.
The Nifty 50 mirrored this pattern, with TCS, Wipro, Adani Enterprises, Dr. Reddy’s, and NTPC emerging as top gainers. On the flip side, losses were led by Axis Bank, ITC, Tech Mahindra, JSW Steel, and HDFC Bank.
Sectoral Analysis
Sectoral indices painted a mixed picture. The Nifty Media and IT indices gained 0.65% and 0.61%, respectively, while Oil & Gas, Realty, Auto, Healthcare, and Pharma also displayed strength. In contrast, Nifty Bank and Financial Services were the top laggards, declining by 0.39% and 0.36%, respectively. The Metal index also recorded a decline during the session.
Midcap and small-cap indices performed better, with the Nifty Midcap 100 rising by 0.35% and the Nifty Smallcap 100 up by 0.41%.
Market Sentiment and Broader Outlook
Brokerage firms urged caution as elevated valuations continue to dominate the market landscape. HDFC Securities emphasized moderating return expectations, noting that muted returns after a decade of continuous gains could alter investor sentiment. Business leaders at a recent BFSI Insight Summit highlighted increasing polarization in markets amid revised earnings growth estimates.
A survey conducted by Smallcase revealed expectations for the Nifty 50 index to trade within a 25,000-28,000 range in the coming year. Investment themes for 2025 are anticipated to center around green energy and banking sectors, aligning with evolving economic priorities.
Primary Market Developments
The IPO landscape remained active, with three out of five IPOs opening on Thursday being fully subscribed. Notable activity included the listing of shares from International Gemmological Institute’s mainline IPO. Additionally, Carraro India, Senores Pharmaceuticals, and Ventive Hospitality began their subscription phases.
In the SME sector, Hamps Bio IPO made its debut, while Identical Brains Studios IPO closed for subscription. Newmalayalam Steel IPO entered its second day of subscription, and NACDAC Infrastructure IPO finalized its allotment.
Global Market Influences
Mixed global cues shaped domestic market sentiment. The Asia-Pacific region showed a varied performance as investors assessed inflation data from Japan and interest rate decisions in China. The People’s Bank of China held its benchmark rates steady, with the one-year loan prime rate at 3.1% and the five-year rate at 3.6%.
In Japan, inflation data exceeded expectations, with core inflation reaching 2.7% for November. This pushed the Nikkei 225 up by 0.37%, while the broader Topix advanced by 0.24%. Conversely, South Korea’s Kospi and Kosdaq indices declined, and Australian, Chinese, and Hong Kong markets remained under pressure.
US Market Recap
Wall Street struggled for direction following the Federal Reserve’s hawkish stance. Benchmark indices closed nearly flat, with the Dow Jones Industrial Average rising marginally by 0.04%, while the S&P 500 and Nasdaq Composite recorded slight losses. Treasury yields surged to multi-month highs, reflecting market caution around the Fed’s slower-than-expected rate cut trajectory for 2025.
Key US economic indicators included an upward revision in Q3 GDP to 3.1%, falling jobless claims, and a surprise increase in existing home sales—all highlighting resilience in the US economy.
European and Emerging Markets
European equities recorded their steepest losses in five weeks, spurred by the Fed’s cautious approach. The STOXX 600 index and the FTSEurofirst 300 index both fell by 1.51%. Emerging market stocks declined as well, with MSCI’s Asia-Pacific index outside Japan dropping 1.41%.
Currency and Commodity Markets
In the currency market, the US dollar strengthened marginally against major currencies. The dollar index climbed to 108.38, with gains against the euro and the yen. Treasury yields also rose, with the 10-year note yield reaching 4.57%, marking the highest level since May.
Commodities displayed mixed trends. Oil prices dipped as central banks signaled a cautious economic outlook, with US crude falling to $69.91 per barrel and Brent settling at $72.88 per barrel. Gold gained 0.35%, trading at $2,596.60 an ounce, benefiting from investor preference for safe-haven assets amid global uncertainty.
Cryptocurrency Market
Bitcoin and Ethereum continued their selloff in the aftermath of the Fed’s decision. Bitcoin fell 5.07%, trading at $95,811.00, while Ethereum declined by 9.13% to $3,352.50. The broader cryptocurrency market reflected similar trends, with investors responding to the implications of tighter financial conditions.
The Indian stock market remained subdued amid global and domestic uncertainties. While sectoral indices and broader markets showed mixed performances, investors navigated through economic data, corporate earnings, and regulatory updates. With evolving global economic dynamics, market participants remain cautious about navigating the challenges and opportunities in the current environment.
