Did the NSE Nifty 50’s Red Close Signal Bigger Concerns with the US Fed Decision Coming Up?

Index	Price	Change	% Chg
Nifty 50	24,668.25	-100.05	-0.40%
Nifty MidCap 50	16,572.90	+116.65	+0.71%
Nifty SmallCap 50	9,378.50	+36.00	+0.39%
Nifty Bank	53,581.35	-2.45	-0.00%
Nifty Financial	24,857.00	-23.40	-0.09%
BSE SENSEX	81,748.57	–384.55	–0.47%

At the close, the Nifty 50 was at 24,668.25 down by 0.40%

On Monday, India’s benchmark indices ended on a negative note, with NSE Nifty 50 falling 100.05 points, or 0.40%, to close at 24,668.25. The index began the day with a negative bias, trading below 24,700 for much of the session. A major reason for the dip was the pressure from heavyweight stocks in the metal and IT sectors, coupled with the uncertainty ahead of the U.S. Federal Reserve’s interest rate decision this week. The market also mirrored weakness seen in Asian equities.

Despite this, Realty and Media sectors managed to outperform, helping to restrict further declines in the broader index. Realty stocks rose significantly due to expectations of growing demand and anticipation of a rate cut cycle in 2025. On the other hand, Metal and IT stocks saw profit booking after strong previous rallies, contributing to the overall market decline.

Key Points:

• Nifty closes at 24,668.25, down by 0.40% (100.05 points).
• Realty and Media sectors outperform, while Metal and IT sectors underperform.
• The market was pressured by weak global commodity prices and uncertainty ahead of the US Fed’s interest rate decision.
• Nifty traded in a range between 24,781.25 (day’s high) and 24,601.75 (day’s low).

Nifty Faces Temporary Pause, Buying Opportunity Seen in Support Zones

Despite the overall negative trend, analysts believe that dips towards the support zone of 24,550 – 24,500 present a buying opportunity. The Nifty50 showed signs of consolidation following the sharp upward movement in the previous session. This consolidation is viewed as a brief pause in the overall uptrend.

Key Insights:

• Nifty is expected to face resistance around 25,125 while finding support between 24,550 – 24,500.
• Analysts suggest buying opportunities in the support zone as the overall trend remains positive.
• A rate cut by the US Fed could further boost sentiment in the market.

Realty Sector Outperforms, Driven by Rate Cut Expectations and Strong PMI Data

The Realty sector was a key outperformer in today’s trading, as it benefitted from optimism surrounding the potential rate cut cycle in 2025. Rising PMI data from manufacturing and services signals a positive turnaround in H2FY25 earnings, which has limited any major downgrades in FY25 earnings. This has provided a tailwind for real estate stocks.

Sectoral Performance:

• Realty sector gains amid strong demand outlook and rate cut expectations.
• Media stocks also performed well, while Metal stocks were the major underperformers.
• US 10-year bond yields and US dollar strength kept investors cautious, with focus on the Fed’s upcoming policy.

Fiscal Deficit Projection and India’s Economic Outlook for FY25

According to CareEdge Ratings, India’s fiscal deficit for FY25 is expected to be 4.8% of GDP, slightly below the budgeted estimate of 4.9%. The strong performance in GST and income tax collections has helped offset weaknesses in corporate tax and union excise duties. However, a Rs 1.5 trillion shortfall in capex could impact long-term infrastructure growth.

Economic Highlights:

• Fiscal deficit is expected to be 4.8% of GDP, marginally lower than the budget estimate of 4.9%.
• Gross tax revenue remains robust, with GST and income tax collections offsetting weaker corporate tax and excise duties.
• Nominal GDP growth is projected at 9.9%, slightly lower than the budgeted 10.5%.
• Real GDP growth remains strong at 6.5% in FY25.

US Fed’s Interest Rate Decision: Market Eyes on Future Policy Trajectory

The US Federal Reserve’s monetary policy decision, expected on December 18, is one of the most anticipated market events of the year. According to the CME FedWatch Tool, there is a 97.1% probability that the Fed will implement a 25 basis points rate cut. However, investors are more focused on the Fed’s future policy direction and its outlook for 2025 rates.

Key Points:

• 97.1% chance of a rate cut by 25 bps expected from the US Fed on December 18.
• Market participants are eager to understand the Fed’s stance on future rate cuts and policy easing.
• A no-rate cut scenario could lead to profit-taking in US equities, potentially impacting Indian markets as well.

Global Commodity Markets Brace for Volatility Amid Geopolitical Tensions

As geopolitical tensions rise, particularly around the US-China trade dynamics, the global commodity markets are expected to face heightened volatility. Analysts advise investors to stay vigilant and adapt to these changing conditions, especially as China faces the risk of economic decoupling from the US, which could lead to market disruptions.

Global Outlook:

• Commodity markets are set for unprecedented volatility, driven by geopolitical factors.
• US-China trade relations remain a key point of concern, particularly with the prospect of economic decoupling.
• Investors should be prepared for market disruptions due to these global uncertainties.

In summary, India’s equity markets faced some pressure today, with Nifty50 closing lower amid weak global cues and uncertainties ahead of the US Fed’s policy decision. While sectors like Realty showed positive movement, others like Metal and IT faced challenges. Analysts remain optimistic about potential buying opportunities in key support zones, while investors await the US Fed’s rate decision to gain further clarity on the future direction of global markets.

Bank Nifty: Down by 0.00%

The Bank Nifty opened the day in the red, showing no significant movement initially, but ultimately closed down at 53,581.35, reflecting a decline of 0.00%. This indicates a subdued performance in the banking sector despite the overall cautious sentiment in the market. Similarly, the BSE Sensex followed suit, ending the session 0.47% lower, closing at a low of 81,748.57.

In the sectorial front, the Realty sector posted a solid gain of 3.10%, with notable contributors like Oberoi Realty Ltd., which surged by 6.21%, and Prestige Estates Projects Ltd., which climbed 4.40%.

The Metal sector was the top loser, declining by 0.97%. Within this sector, National Aluminium Company Ltd. faced a sharp drop of -2.91%, and Jindal Steel & Power Ltd. lost -2.20%, reflecting the challenges the sector is currently grappling with.

Foreign Institutional Investors (FII/FPI) and Domestic Institutional Investors (DII) were seen to be in net selling positions, signaling a more cautious approach in the market. FIIs bought stocks worth ₹11,678.24 crore but sold ₹11,956.94 crore, resulting in a net outflow of ₹278.70 crore.

DIIs bought stocks valued at ₹8,636.76 crore and sold ₹8,871.01 crore, leading to a net outflow of ₹234.25 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included IndusInd Bank with a 1.17% increase, Canara Bank with a 0.59% increase, Bank of Baroda with a 0.14% increase, Punjab National Bank with a 0.11% increase, and IDFC First Bank with a 0.11% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 1.29% decline, HDFC Bank with a 0.52% decline, Kotak Bank with a 0.31% decline, State Bank of India with a 0.10% decline, and ICICI Bank with a 0.10% decline,. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 16th December, 2024

22 K Gold / g	₹ 7,140
24 K Gold / g	₹ 7,789
18 K Gold / g	₹ 5,842

Silver / g	₹ 92.50
Silver / kg	₹ 92,500

Will the Rupee Sink Further? A Historic Fall to 84.89 Against the Dollar!

The Indian rupee has just hit a new all-time low, falling 9 paise to 84.89 against the US dollar in early trading. What’s behind this sharp decline, and could it go even lower? Here’s what you need to know:

• Rupee falls to new low: The rupee opened at 84.83 and touched 84.89 during intraday trading, marking a historic drop.
• Negative market sentiment: The weak domestic equities and rising US bond yields have dragged the rupee down, despite a slight cushion from a soft US dollar.
• Previous low: Just last week, the rupee hit 84.88 against the dollar, and today’s drop signals ongoing pressures.

However, it’s not all doom and gloom:

• FII inflows and cooling inflation: Experts point out that Foreign Institutional Investor (FII) inflows and a decline in inflation may provide some relief to the rupee at lower levels.
• Lower inflation: Wholesale inflation dropped to a 3-month low of 1.89%, and retail inflation eased to 5.48%, bringing it within the RBI’s comfort zone. This could allow room for a rate cut by the RBI in February, which might offer support for the rupee.

Despite these positive signals, the outlook remains uncertain:

• Federal Reserve’s rate decision: The odds of a rate cut by the US Federal Reserve could negatively impact the rupee in the short term. Traders are closely watching the upcoming FOMC meeting and PMI data from the US.
• Crude oil prices: Rising crude oil prices continue to put additional pressure on the rupee, as India is a major oil importer.
• Dollar index and crude oil: The dollar index was down slightly by 0.14% at 106.85, and Brent crude fell by 0.78% to $73.91 per barrel—both offering a bit of relief to the rupee.

What’s Next for the Rupee?
With the rupee trading in a range of 84.65 to 85.05, traders and investors are keeping a close eye on both global and domestic developments. Could the rupee bounce back or will it continue to slide further? Time will tell.

Stocks Highlights

Dr. Reddy’s Laboratories Ltd. continues to show resilience in the market. The company’s share price increased by 1.74%, from Rs 1,246.35 to Rs 1,268.00 in its latest trading session, reflecting strong investor confidence. Dr. Reddy’s has been making impressive strides in improving its financial performance, particularly in terms of its Return on Equity (ROE), and its disciplined approach to managing costs.

• Stock Performance: Dr. Reddy’s saw a 1.90% increase in its share price, moving from Rs 1,246.35 to Rs 1,270.00. This price movement indicates positive market sentiment towards the company, with investors clearly confident in its future prospects.
• ROE Outperformance: The company has posted an ROE of 19.74% for the year ending March 31, 2024, surpassing its 5-year average of 15.62%. This suggests that Dr. Reddy’s is more effectively utilizing shareholders’ equity to generate profits, reflecting a stronger operational performance.
• Stock Returns vs Nifty Pharma: Dr. Reddy’s generated 35.55% returns over the last 3 years, which underperformed compared to the 63.21% return delivered by the Nifty Pharma Index in the same period. This indicates that while Dr. Reddy’s stock has performed well, it hasn’t kept pace with the broader pharmaceutical sector.
• Cost Management: The company spent less than 1% of its operating revenues on interest expenses and 17.96% on employee costs for the year ending March 31, 2024. This shows that Dr. Reddy’s is managing its financial resources efficiently, which is crucial for long-term stability and growth.

Titan Company Ltd. experienced a 1.96% decline in its share price, moving from Rs 3,508.85 to Rs 3,440.00. While this drop may raise some concerns, it is important to recognize the strong Return on Equity (ROE) Titan has achieved. The company’s fundamentals remain strong, with impressive profitability and prudent cost management. This suggests that while its stock price may fluctuate in the short term, Titan’s financial strength will likely keep it well-positioned for future growth.

• Stock Performance: Titan’s share price decreased by 1.93%, dropping from Rs 3,508.85 to Rs 3,441.00. This decline in stock price could be attributed to market conditions or temporary external factors, but the company’s historical performance indicates resilience.
• ROE Outperformance: Titan posted an ROE of 37.21% for the year ending March 31, 2024, which significantly outperforms its 5-year average of 25.48%. This remarkable improvement highlights Titan’s ability to generate greater returns on equity, showcasing the company’s strong operational efficiency.
• Decrease in Cash from Investing Activities: Titan used Rs 189 crore for investing activities, which represents a YoY decrease of 89.56%. This sharp reduction suggests a more cautious approach to investments, possibly to conserve liquidity for future opportunities or to manage uncertainties in the market.
• Cost Efficiency: Titan allocated 1.21% of its operating revenues to interest expenses and 3.65% towards employee costs for the year ending March 31, 2024. These efficient cost management strategies suggest that Titan is maintaining control over its operating expenses, allowing the company to reinvest in its business for continued growth.

Advance Decline Ratio

Today, the advance-decline ratio was 1.11 and the market breadth was positive. The volatility index India Vix increased by 7.41 to settle at 14.02 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1484
Decliners – 1332
52Wk High – 128
52Wk Low – 15
High Band Hitters – 150
Low Band Hitters – 61
200d SMA – 23793
50d SMA – 24400
20d SMA – 24270

Top Gainers and Losers Stocks

The top gainers were Dr. Reddy (+1.74%), IndusInd Bank (+1.17%), HDFC Life (+0.46%), Power Grid (+0.27%), and Bajaj Finance (+0.24%).

The top losers were Titan (-1.96%), Hindalco (-1.39%), Adani Ports (-1.38%), TCS (-1.29%), and Tech Mahindra (-1.24%).

Top Gainers and Losers Sectors

The top gainer sectors were Realty (+3.10%), Media (+1.45%), Consumer Durables (+0.52%), Pharma (+0.44%), and Auto (+0.07%).

The top losers sectors were Metal (-0.97%), IT (-0.74%), Oil & Gas (-0.58%), FMCG (-0.30%), and Financial Services (-0.09%).

SECTORS – NOTABLE ACTION
REALTY +3.10%
MEDIA +1.45%
CONSUMER DURABLES +0.52%
METAL -0.97%
IT -0.74%
OIL & GAS -0.58%

Stocks Ban List

(SEBI) F&O ban list (MANAPPURAM close at +185.03), (GRANULES close at -584.10), (SAIL close at -123.61), (HINDCOPPER close at -290.65), (NATIONALUM close at -219.91), (RBLBANK close at -172.53), (METROPOLIS close at -2212.20), and (PVRINOX close at +1474.35) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

BANDHANBNK, PNB, ABFRL, and AARTIIND stocks has the possibilities of entrants in the ban list.

METROPOLIS, and PVRINOX stocks has the possibilities of exit from the ban list.

Daily Pivots

S2	S1	P	R1	R2
24504	24586	24684	24766	24863

As per the above pivots data, 24300 to 24900 is the Nifty 50 trading range.  

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GIFT NIFTY
BSE Sensex
FII Data

Read Previous -Daily Insights- here
Nifty’s Stunning Recovery: What Lies Ahead for the Indian Stock Market? Will Nifty Reach the Magic Mark of 25,000?
Nifty 50 Struggles Amid CPI Data and Global Volatility: Will IT Stocks Lead the Way or Will Market Correct?

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This article is only for educational purposes and is not an investment advice.