Indian Markets Tumble Over 1% Amid Volatility
Mumbai: The Indian stock markets witnessed a sharp decline, with key indices Sensex and Nifty plunging over 1%, driven by a mix of global and domestic pressures. At 10:51 a.m., the Nifty fell 306.80 points (1.25%) to settle at 24,241.90, while the Sensex dropped 1,017.03 points (1.25%) to 80,272.93. The broad-based sell-off reflected a cautious investor sentiment, as geopolitical tensions in the Middle East, rising US bond yields, and heavy selling by Foreign Institutional Investors (FIIs) weighed on the markets.
Market breadth on the National Stock Exchange (NSE) showcased the bearish trend, with 2,047 stocks trading in the red compared to just 340 in the green. Key sectors such as metals, PSU banks, automobiles, and IT bore the brunt of the sell-off, with major stocks like Tata Steel, IndusInd Bank, and Bajaj Finance leading the decline.
Analysts attribute the downtrend to a combination of global uncertainties and high domestic valuations, which continue to encourage FII outflows. While inflationary pressures easing may act as a positive counterweight, the markets remain wary ahead of the US Federal Reserve’s upcoming interest rate decision, adding another layer of uncertainty to the already volatile environment.
Key Indices Drop Significantly:
On Friday, December 13, the Sensex and Nifty experienced significant declines, shedding over 1%. As of 10:51 a.m., the Nifty had dropped by 306.80 points (1.25%) to settle at 24,241.90, while the Sensex plunged by 1,017.03 points (1.25%) to 80,272.93.
Market Breadth:
The National Stock Exchange (NSE) reflected the bearish sentiment, with 2,047 stocks trading in the red against just 340 stocks in the green.
Factors Driving the Decline
- Middle East Tensions:
Ongoing geopolitical issues have raised concerns, affecting global market sentiments. - Rising US Bond Yields:
Increasing bond rates in the US are diverting investments away from emerging markets like India. - FII Selling Pressure:
Foreign Institutional Investors (FIIs) sold shares worth Rs 3,560.01 crore on December 12, while Domestic Institutional Investors (DIIs) bought shares worth Rs 2,646.65 crore. - Anticipation of Federal Reserve Rate Decision:
The market is cautious ahead of the Federal Reserve’s upcoming interest rate decision on December 18.
Market Performance
- Sectoral Weakness:
All major sectors, including PSU banks, metals, real estate, automobiles, IT, pharmaceuticals, and FMCG, witnessed strong selling. - Key Losers:
Stocks such as Tata Steel, JSW Steel, IndusInd Bank, Axis Bank, Bajaj Finserv, SBI, M&M, and Bajaj Finance were among the top decliners. - Indices Performance:
- Nifty Bank: Down 839.65 points (1.58%) to 52,376.80.
- Nifty Midcap 100: Declined 938.85 points (1.59%) to 58,082.85.
- Nifty Smallcap 100: Fell 391.85 points (2.01%) to 19,074.70.
Analysts’ Insights
- Headwinds:
The resumption of FII sales is a significant challenge, as high valuations in India make selling attractive. A stronger dollar post-US elections further incentivizes this trend. - Tailwinds:
Declining inflation offers a silver lining, potentially providing support to the market in the medium term.
Looking Ahead
While market volatility persists, analysts suggest that global cues and domestic developments will continue to dictate market trends. Investors are advised to remain cautious and keep a close watch on key macroeconomic indicators and international events.
