Sensex Drops 952 Points, Nifty Below 24,000 Amid US Federal Reserve Impact
Stock Market Update December 19, 2024 – The Indian equity markets opened lower on Thursday, mirroring the negative sentiment on Wall Street after the US Federal Reserve delivered a hawkish outlook for 2025. At 11:00 AM, the benchmark BSE Sensex dropped by 952.64 points, or 1.19%, to trade at 79,229.56, while the Nifty 50 index fell 254.30 points, or 1.05%, to 23,944.55. This marks a challenging day for domestic markets as investors digest the Fed’s latest announcements alongside broader global concerns.
Key Movements in Indian Indices
All 30 constituent stocks of the BSE Sensex traded in the red during the morning session, led by losses in Asian Paints, which declined by 2.97%. Other notable laggards included Bajaj Finance, Bajaj Finserv, Mahindra & Mahindra, and Kotak Mahindra Bank. On the Nifty 50 index, only eight stocks managed to trade higher. Dr. Reddy’s Laboratories led the gainers with a 2.58% rise, followed by Tata Consumer Products, Cipla, BPCL, and Trent. However, the index remained under pressure due to sharp declines in Asian Paints, Bajaj Finance, Kotak Mahindra Bank, and Infosys.
Sectorally, the Pharma and Healthcare indices provided some relief by advancing 0.69% and 0.58%, respectively. Other sectors, including Financial Services, IT, and Metal, registered losses exceeding 1%, with the Financial Services index experiencing the sharpest decline of 1.37%.
Broader Markets and IPO Action
Broader markets mirrored the decline in benchmark indices. The Nifty Smallcap 100 fell 0.76%, and the Nifty Midcap 100 dipped 0.56%. These movements reflect the cautious sentiment across both large-cap and mid-cap segments. Foreign portfolio investors (FPIs) continued their selling spree, adding pressure on domestic equities.
Amid the subdued sentiment, India’s primary market witnessed significant activity. Five mainline IPOs, including DAM Capital Advisors, Transrail Lighting, Concord Enviro Systems, Sanathan Textiles, and Mamata Machinery, opened for subscription. In the SME segment, New Malayalam Steel launched its IPO, while Inventurus Knowledge Solutions and Yash Highvoltage were set to list on the bourses. Subscription for NACDAC Infrastructure’s IPO closes today, and Identical Brains Studios enters its second day of subscription.
Impact of Federal Reserve’s Hawkish Outlook
The Federal Reserve’s decision to cut its benchmark funds target rate by 25 basis points to 4.25%-4.50% was widely anticipated. However, the central bank’s indication of a slower pace of easing in 2025 dampened market sentiment globally. The Fed reduced its projected rate cuts for 2025 from four to two, signaling a cautious approach toward policy easing. Concerns over sustained inflation pressures further rattled investors.
This hawkish commentary resulted in significant losses on Wall Street, with the Dow Jones Industrial Average dropping over 1,100 points on Wednesday. The Nasdaq and S&P 500 also logged their largest single-day declines in months. These developments have directly influenced sentiment in the Indian markets, further exacerbated by sustained FPI outflows.
Global Market Trends
Asian markets tracked Wall Street’s overnight losses, extending the downturn into Thursday. Japan’s Nikkei 225 dropped 0.93%, and the Topix fell 0.49%. South Korea’s Kospi and Kosdaq indices declined by 1.81% and 2.13%, respectively. Australia’s S&P/ASX 200 traded 1.4% lower, while Hong Kong’s Hang Seng index and China’s Shanghai Composite fell by 1.34% and 1%, respectively. Investors in the Asia-Pacific region remained cautious, awaiting the outcome of the Bank of Japan’s policy meeting.
In Europe, markets showed resilience, supported by gains in technology stocks. The STOXX 600 and FTSEurofirst 300 indices ended modestly higher. However, overall global sentiment remains subdued as central banks worldwide adopt cautious approaches.
Sectoral Analysis in India
Pharma and Healthcare sectors were the only bright spots in the Indian market, with indices gaining 0.69% and 0.58%. Stocks like Dr. Reddy’s, Cipla, and Apollo Hospitals supported these gains, reflecting resilience in defensive sectors amid broader market declines.
On the other hand, Financial Services, IT, and Metal indices faced steep declines, each dropping 1.24%. Banking stocks underperformed, with Nifty Bank, PSU Bank, and Private Bank indices registering losses of up to 1.92%. Auto, Realty, Consumer Durables, and Oil & Gas sectors also struggled, amplifying market-wide negativity.
Key Global Indicators and Asset Movements
The Federal Reserve’s actions impacted global financial markets beyond equities. Treasury yields in the United States rose, with the benchmark 10-year yield increasing by 11.3 basis points to 4.498%. The dollar strengthened against global currencies, pushing the dollar index up by 1.09% to 108.09.
Commodities also responded to the Fed’s revised outlook. Gold prices fell sharply, with spot gold declining 1.94% to $2,594.24 per ounce, while U.S. gold futures dropped 2.05% to $2,590.20 per ounce. Crude oil prices bucked the trend, with U.S. crude settling 0.71% higher at $70.58 per barrel and Brent crude rising 0.27% to $73.39 per barrel.
Cryptocurrencies remained under pressure, with Bitcoin falling 5.17% to $100,916 and Ethereum declining 6.14% to $3,692. The Fed’s hawkish stance raised concerns about liquidity, further dampening sentiment in the digital asset space.
Market Outlook
Indian equities face persistent challenges as global cues remain unfavorable. The Federal Reserve’s cautious tone, combined with ongoing FPI outflows, has created a volatile environment. However, the resilience of defensive sectors like Pharma and Healthcare highlights opportunities for selective investment. The heightened activity in the primary market, driven by several IPOs, underscores the continued interest in new investment avenues.
In the near term, macroeconomic developments, including fiscal policy announcements in India’s upcoming Budget, will play a pivotal role in shaping market direction. Additionally, global central bank decisions and geopolitical developments will continue to influence investor sentiment.
The road ahead for Indian markets remains uncertain, with challenges posed by global volatility and domestic factors. However, the underlying strength of the economy and evolving opportunities in emerging sectors provide a silver lining for long-term investors.
