13-Dec-2024, 02:09 PM
The Indian stock market faced significant declines on December 13, 2024, with both the Nifty and Sensex experiencing sharp drops attributed to weak global indicators and concerns over Federal Reserve rate cut predictions. The BSE Sensex plunged by over 1,000 points, while the Nifty fell by approximately 370 points during the trading session, marking a notable downturn for investors.Several factors contributed to this market slump.
Firstly, foreign portfolio investors (FPIs) were net sellers, offloading stocks worth ₹3,560 crore on the previous day. This selling pressure was compounded by rising concerns about a strong US dollar and increasing US bond yields, which have made emerging markets like India less attractive to investors. The US dollar index rose by 0.15% to 107.11, while the yield on the US 10-year Treasury bonds climbed to 4.324%, reflecting heightened inflation fears in the US economy.
.Moreover, Asian markets also reported losses, with major indices in China, Japan, and Hong Kong declining due to a lack of fresh fiscal stimulus from China’s Central Economic Work Conference. This uncertainty in global markets further exacerbated the negative sentiment among Indian investors.
. The overall mood was cautious as traders anticipated the upcoming Federal Reserve meeting scheduled for December 17-18, where interest rate decisions will be closely monitored.Despite a recent easing of inflation in India—November’s Consumer Price Index (CPI) fell to 5.48%, within the Reserve Bank of India’s tolerance band—investors remained wary of potential imported inflation due to the strengthening dollar.
. Analysts suggested that while declining inflation could pave the way for a potential rate cut by the Monetary Policy Committee (MPC) in February, the immediate outlook remained bleak as market participants reacted to global economic pressures.Sector-wise, metal stocks led the decline, with Tata Steel and JSW Steel dropping significantly. Banking and auto sectors also faced substantial losses, contributing to the overall market downturn.
. The broader market sentiment reflected a negative outlook, with many stocks hitting lower circuit limits and others reaching their 52-week lows.In summary, the combination of weak global signals, FPI selling activity, rising dollar strength, and inflation concerns has created a challenging environment for Indian equities. As investors brace for further developments from both domestic and international fronts, market volatility is expected to persist in the near term.
