Learn how global cues, Federal Reserve policies, and year-end adjustments are impacting markets
The Indian stock market witnessed a subdued trading session on the last day of 2024, influenced by weak global cues and year-end profit booking. Benchmark indices, the BSE Sensex and NSE Nifty50, opened lower and extended their losses as the session progressed. Global uncertainties, high yields, and mixed domestic sentiment kept investors cautious.
Performance of Benchmark Indices
At 11 AM, the BSE Sensex was trading 290.95 points, or 0.37%, lower at 77,957. The Nifty50 index also slipped, declining 77.85 points, or 0.33%, to trade at 23,567.05. The performance reflected a broad-based selloff, driven by global and domestic factors. On the 30-stock Sensex, only 10 stocks were trading higher, while the rest faced losses. Zomato led the decline with a 2.17% drop, followed by IT majors Tech Mahindra, HCLTech, Infosys, and TCS. Gains were led by SBI, which was up 0.51%, followed by Nestle India, Asian Paints, Adani Ports & SEZ, and Hindustan Unilever.
The Nifty50 exhibited a similar trend, with ONGC leading the gainers at a 1.29% increase. BEL, Coal India, and Kotak Mahindra Bank also posted gains, while Tech Mahindra, Infosys, TCS, and Adani Enterprises dragged the index lower.
Sectoral Performance
Sectoral indices presented a mixed picture. The Nifty IT index led the declines with a 2.13% drop, followed by the Realty index, which fell by 1.05%. Other lagging sectors included Nifty Bank, Financial Services, Consumer Durables, FMCG, and Auto. On the positive side, Pharma, PSU Bank, Metal, Healthcare, and Oil & Gas indices managed to stay in the green, driven by selective buying in these spaces.
The broader markets also struggled, with the Nifty Midcap 100 down 0.55% and the Nifty Smallcap 100 declining 0.20%. Volatility remained high as investors navigated uncertain macroeconomic signals.
Global Cues and Federal Reserve Impact
Weak global cues significantly influenced the domestic market. Elevated U.S. Treasury yields, which hovered around 4.5%, pressured equity markets worldwide. The Federal Reserve’s cautious stance on interest rate cuts for 2025 has kept yields high, reducing risk appetite in equity markets. Over the past three sessions, U.S. investors have booked profits at elevated valuations, dragging major indices lower.
The Dow Jones Industrial Average closed 418.48 points lower on Monday, a 0.97% drop, while the S&P 500 and Nasdaq Composite fell 1.07% and 1.19%, respectively. Elevated yields and concerns about inflationary pressures from incoming U.S. policies have added to the uncertainty.
Domestic Sentiment and Investor Behavior
Domestic market sentiment remains subdued due to global headwinds. However, small investors in India have shown remarkable resilience. In 2024, individual investors poured a record Rs 1.54 trillion into equities through the National Stock Exchange, surpassing the previous high of Rs 1.42 trillion in 2021. This robust inflow reflects continued confidence in the long-term potential of Indian equities, despite short-term volatility.
Investors are looking forward to fiscal measures in the upcoming Union Budget. Anticipation of supportive policies could help identify value pockets across sectors, particularly in midcap and smallcap stocks.
Performance of Commodities and Safe Havens
Commodities like gold and silver outperformed equities in 2024, as risk-averse investors sought safer options. Gold surged 25.25% this year, while silver gained 23.11% by December 25. Analysts recommend allocating a higher portfolio share to these safe havens in 2025 to hedge against market volatility.
Oil prices remained stable, with U.S. crude settling at $70.99 per barrel and Brent crude at $74.39 per barrel. The steady prices reflect balanced demand-supply dynamics as the global economy continues to recover.
IPO Market Updates
India’s primary markets remained active as several companies launched initial public offerings (IPOs). The market regulator SEBI approved IPO proposals from six companies, including Ivalue Infosolutions, Ather Energy, and Oswal Pumps. In the SME segment, Technichem Organics Limited opened for subscription, while Citichem India Limited’s subscription window closed today.
On Monday, three IPO debutants—Senores Pharmaceuticals, Ventive Hospitality, and Carraro India—received mixed responses. While Senores Pharmaceuticals surged 43% over its issue price, Carraro India fell by 10%.
Outlook for 2025
Despite the mixed performance today, Indian equity markets are set to close 2024 with notable gains. Both the Sensex and Nifty have delivered approximately 9% returns this year, marking the ninth consecutive year of positive performance. The question remains whether the indices will extend their winning streak into 2025.
Technical charts suggest cautious optimism for the coming year. Analysts predict that fiscal measures in the budget, coupled with easing inflation and stable monetary policy, could provide a supportive environment for equity markets. However, global risks, including high yields and geopolitical tensions, remain key challenges.
International Markets
Major markets in the Asia-Pacific region were largely closed for the New Year holiday. Australia’s S&P/ASX 200 index traded 0.56% lower during its shortened session, while Japan and South Korea markets remained closed. In China, weaker-than-expected factory activity data added to concerns about the effectiveness of Beijing’s stimulus measures. The CSI 300 fell 0.51%, while the Shanghai Composite posted a marginal gain of 0.08%.
European markets also traded lower due to high bond yields. The STOXX 600 index declined by 0.46%, snapping a three-day winning streak. Germany, Italy, and Switzerland markets remained closed, while the UK and France had shorter trading sessions.
Challenges Ahead
The interplay of global and domestic factors continues to shape market dynamics. Rising U.S. Treasury yields and profit-taking at elevated valuations have dampened sentiment in global equities. Meanwhile, the Federal Reserve’s slower pace of interest rate cuts and high inflation concerns are influencing investor behavior.
Domestically, markets are navigating fiscal and monetary policy uncertainties. While individual investors have shown strong participation, institutional flows remain volatile. Upcoming policy announcements and earnings season will be critical in determining market direction.
The Indian stock market ended 2024 on a cautious note, reflecting global uncertainties and year-end adjustments. While challenges persist, strong inflows from domestic investors and robust corporate performance provide a solid foundation for 2025. As the year unfolds, market participants will closely monitor fiscal measures, global economic trends, and corporate earnings for cues on the next phase of growth.
