Global cues mixed as investors await the US Fed policy decision this week
The Indian stock market experienced a downturn on December 17, 2024, as benchmark indices BSE Sensex and Nifty 50 traded lower, reflecting cautious investor sentiment. A mix of domestic market pressures and global uncertainties impacted trading as investors awaited critical updates from the US Federal Reserve. Despite strong performances from certain pockets like Adani Ports and Tata Motors, losses in heavyweights like Bharti Airtel, TCS, and Power Grid weighed on the indices.
Benchmark Indices Trade Lower
At 11:00 AM, the BSE Sensex fell by 594.91 points, or 0.73%, settling at 81,153.66. The broader Nifty 50 was down 168.35 points, or 0.68%, trading at 24,499.90. This decline reflected a broader sense of caution across the market as investors reacted to global mixed cues and awaited further clarity on monetary policies.
Among Sensex constituents, Adani Ports & SEZ and Tata Motors emerged as the only stocks trading higher. Adani Ports gained 0.75%, while Tata Motors also remained in positive territory. However, significant losses were registered by Bharti Airtel (down 2.19%), along with declines in TCS, Power Grid Corp, Larsen & Toubro, and ITC.
On the Nifty 50, only five stocks – Cipla (up 1.39%), Adani Ports & SEZ, Tata Motors, Apollo Hospitals, and Tata Steel – bucked the trend. Losses in Shriram Finance (down 3.49%) further dragged the index. Bharti Airtel, TCS, Power Grid Corp, and Larsen & Toubro were among the notable laggards on the Nifty.
Sectoral Performance: Financial Services, Banks Lead Decline
The sectoral indices reflected widespread negativity across the market. The Financial Services index recorded the steepest decline, falling 1.05%. Bank Nifty and Oil & Gas also slipped by 1.03% each, further adding to the negative sentiment.
Other major sectors such as Consumer Durables, Auto, FMCG, IT, Metal, Pharma, and Healthcare also traded in the red, reflecting broader concerns across industries.
In contrast, broader markets showed mixed trends. The Nifty Midcap 100 managed to stay marginally positive, rising by 0.09%, while the Nifty Smallcap 100 was slightly lower by 0.02%. This divergence highlights the ongoing resilience in midcap stocks even as large-cap heavyweights struggled under selling pressure.
Global Cues Influence Investor Sentiment
Global markets provided mixed signals, impacting investor sentiment in Indian equities. The Nasdaq Composite closed at a record high on Monday, boosted by gains in mega-cap technology stocks and lower Treasury yields. The S&P 500 also closed higher, offering positive momentum for certain sectors.
In the Asia-Pacific region, markets traded in a mixed manner on Tuesday. Japan’s Nikkei 225 rose by 0.37%, and Australia’s S&P/ASX 200 gained 0.84%. However, South Korea’s Kospi declined by 0.72%, and Hong Kong’s Hang Seng fell 0.59%.
Soft economic data from China weighed on investor sentiment. Weak retail sales figures underscored the need for additional stimulus measures, raising concerns over China’s slowing economic recovery.
US Federal Reserve Meeting Creates Anticipation
The ongoing market volatility stems largely from the anticipation of the US Federal Reserve’s monetary policy meeting scheduled this week. The Federal Open Market Committee (FOMC) is expected to announce its final policy decision for 2024, with many analysts predicting a 25 basis point rate cut.
Investors remain focused on the Fed’s Summary of Economic Projections (SEC) and its dot plot, which outlines the central bank’s future rate plans. Sticky inflation data and a relatively strong US economy have complicated the outlook, creating uncertainty around the Fed’s easing timeline.
Yields on US Treasury bonds steadied near three-week highs as markets awaited the decision. The benchmark 10-year yield stood at 4.395%, reflecting investor caution.
IPOs in Focus as December Sees Record Activity
December 2024 has shaped up to be the busiest month for Initial Public Offerings (IPOs), with 11 companies already announcing listing plans. This figure is expected to grow further as investment bankers anticipate 2-3 additional launches before year-end.
Foreign Portfolio Investors (FPIs) have played a significant role, investing ₹25,300 crore through the anchor book for IPOs this year. In comparison, domestic mutual funds have invested ₹20,351 crore. This significant interest highlights the attractiveness of Indian equities, particularly in the IPO space.
Additionally, institutional investors have increased their activity in the SME IPO segment. Their participation has now reached nearly 50%, compared to single-digit contributions three years ago.
Commodity Markets: Oil and Gold
Crude oil prices fell amid renewed concerns over Chinese demand following soft economic data. US crude settled at $70.71 per barrel, down 0.81%, while Brent crude dropped 0.78% to $73.81 per barrel.
Gold prices rose marginally as the dollar softened ahead of the Federal Reserve’s meeting. Spot gold increased by 0.17% to $2,652.29 per ounce, supported by cautious investor sentiment.
Bitcoin Surges to New Highs
Bitcoin continued its rally, touching a new high above $106,000 after US President-elect Donald Trump proposed establishing a bitcoin strategic reserve. The news fueled investor optimism, pushing Bitcoin’s price up by 3.10% to $106,015.
Ethereum also gained traction, rising 4.94% to $4,046.40. The crypto market remains buoyant, driven by increased institutional adoption and growing optimism surrounding regulatory developments.
Broader Market Trends
On Monday, the Indian stock market also witnessed declines, with the Sensex closing at 81,748.57, down 384.55 points or 0.47%. The Nifty 50 ended at 24,668.25, falling by 0.40%. However, the broader markets outperformed, with the Nifty Midcap 100 rising 0.77% and the Nifty Smallcap 100 gaining 0.64%.
Realty stocks surged on Monday, with the Nifty Realty index climbing 3.10%. Other sectoral gainers included Media, Pharma, and PSU Banks, while Financial Services, FMCG, IT, and Metal sectors ended lower.
Outlook for the Day
The Indian stock market remains cautious amid global uncertainties, including the US Fed’s policy stance, mixed economic data from China, and concerns over inflation. The ongoing correction reflects investor caution, especially in heavyweights like Financial Services and Oil & Gas stocks.
Midcap and smallcap indices have displayed relative resilience, indicating that investors continue to find value in the broader markets. The IPO boom in December reflects strong investor appetite for new opportunities, particularly in emerging segments.
With global markets awaiting central bank decisions and macroeconomic cues, volatility is likely to persist in the near term. Traders and investors remain watchful of US Federal Reserve announcements, foreign fund inflows, and sector-specific triggers.
