Indian Stock Market Drops Rs 17 Lakh Crore Amid Fed’s Hawkish Stance and FII Selling

Index	Price	Change	% Chg
Nifty 50	23,587.50	-364.20	-1.52%
Nifty MidCap 50	15,881.10	-441.65	-2.71%
Nifty SmallCap 50	8,925.85	-252.60	-2.75%
Nifty Bank	50,759.20	-816.50	-1.58%
Nifty Financial	23,591.70	-314.90	-1.32%
BSE SENSEX	78,041.59	–1176.46	–1.49%

At the close, the Nifty 50 was at 23,587.50 down by 1.52%

Indian equities experienced a disastrous week, with both the Nifty 50 and Sensex recording their steepest declines in over two years, losing more than 5% each. The sharp downturn wiped out a staggering Rs 17 lakh crore in market capitalization from BSE-listed firms. The sell-off was driven by global market volatility, hawkish signals from the U.S. Federal Reserve, and foreign institutional investor (FII) selling, all of which undermined investor confidence.

Key Market Highlights:

• Nifty lost 5% this week, marking the biggest crash in two years.
• Sensex shed over 4,000 points in five days, wiping out Rs 17 lakh crore in market cap from BSE-listed companies.
• Nifty IT was the biggest laggard, dropping more than 2%, despite strong results from Accenture.
• The market saw widespread sectoral weakness, with realty, IT, and financials suffering the most.
• RBL Bank saw its stock tumble 7%, extending its seven-day losing streak, after Morgan Stanley’s downgrade.

The U.S. Fed’s Impact: What Caused the Global Sell-Off?

The U.S. Federal Reserve’s hawkish outlook on rate cuts triggered panic in global markets. The Fed’s decision to reduce the forecast of rate cuts for 2025 from four to just two disappointed investors, triggering a sell-off in equities worldwide. As foreign fund outflows intensified, the Indian market faced additional pressure.

• U.S. Fed’s revised rate cut forecast (down from four to two) sparked market panic.
• Foreign institutional investors (FII) continued aggressive selling, dumping Rs 8,000 crore worth of Indian equities in just three sessions.
• Indian equities are under pressure due to high valuations, sluggish earnings growth, and concerns about the U.S. economic outlook.

Sectoral Woes: Realty, IT, and Financials Hit Hard

The Nifty IT sector, once a leader in the market rally, was the biggest laggard, dropping over 2% as global market volatility and concerns about U.S. rate hikes rattled investors. The realty, auto, and financial sectors also faced heavy losses.

• Nifty IT fell over 2%, underperforming despite strong earnings from Accenture.
• Selling pressure was widespread across all sectors, with realty, auto, and financials taking the hardest hits.
• Mid-cap and small-cap stocks also faced significant declines, with valuation concerns at historical highs.

RBL Bank in Crisis: A Massive 7% Loss Amid Downgrades

In the midst of the market rout, RBL Bank saw its stock plunge by 7% on December 20, marking its seventh consecutive day of losses. With the stock now down 16% over the past week, Morgan Stanley’s downgrade and weak margin outlook for RBL Bank further dented sentiment.

• RBL Bank fell by 7%, extending its seven-day losing streak.
• Morgan Stanley downgraded the stock and slashed its price target by 11%, citing high credit costs and weak asset quality.
• The stock’s exit from the F&O ban list saw a spike in trading volumes, adding to the sell-off pressure.

Nifty’s Technical Breakdown: Market Sentiment in Jeopardy

The Nifty 50 fell sharply on December 20, dropping over 1.5% and slipping below its 200-day exponential moving average (DEMA), marking a significant breach of technical support. The 200-DMA had been a key level of support, and its breach opened the door for further downside.

• Nifty closed at 23,587.50, down 364.20 points (1.52%).
• The index is now in correction territory, with a 10% decline from its all-time high.
• Key technical levels breached, including the 200-DMA, signaling further downside risk.

FII Selling and U.S. Rate Outlook: Driving Global Market Pressure

The hawkish stance of the U.S. Fed, combined with foreign institutional investors’ aggressive selling, caused severe pressure on Indian equities.

• FII selling amounted to Rs 8,000 crore over the last three sessions, continuing a trend of capital outflows from the Indian market.
• U.S. Fed’s cautious rate-cut outlook contributed to the broader market sentiment turning negative, with markets anticipating three rate cuts in 2025 but receiving signals of just two.
• The strong U.S. dollar added to the negative sentiment, prompting investors to move away from riskier assets like Indian equities and shift towards safe-haven assets.

India’s Forex Reserves Drop and Rising Global Tensions

India’s foreign exchange reserves continued their decline, dropping $2 billion to $652.86 billion as of December 13. The decrease in reserves was driven by market interventions by the Reserve Bank of India (RBI) to stabilize the rupee and curb volatility. The rupee remained under pressure, and concerns around India’s slowing economic growth added to the market’s bearish sentiment.

• India’s forex reserves dropped by $2 billion, reflecting ongoing volatility in the rupee and weaker capital flows.
• The rupee remains under pressure, trading at 85.0150 against the dollar, following a sharp drop earlier in the session.

What’s Next for the Market?

As Indian equities face a volatile phase, market sentiment remains cautious due to global economic uncertainties, hawkish Fed signals, and foreign fund outflows. High valuations and sluggish earnings growth further dampen investor sentiment, and upcoming events, including U.S. inflation data and India’s Union Budget, will play a crucial role in shaping the near-term market outlook.

• High valuations and low earnings growth are major concerns for the market, limiting any near-term upside potential.
• FII selling and global volatility will continue to weigh on market sentiment.
• Key events, including U.S. inflation data, India’s Union Budget, and Q3 earnings, will be pivotal in determining the market’s direction.

Investor Strategy: A Cautious Approach Amid Uncertainty

In these uncertain times, investors are advised to adopt a balanced strategy, focusing on large-cap stocks with stable fundamentals, while selectively exposing to domestic-focused tech companies offering growth potential. It’s essential to maintain caution and closely monitor upcoming economic data and corporate earnings for signs of recovery.

• A balanced investment strategy with a focus on large caps and select tech companies may offer prudent growth opportunities while managing risks.
• Investors should be prepared for further volatility and wait for more favorable conditions before committing significant capital.

Summary: Indian markets are undergoing a severe correction, with global and domestic factors including FII outflows, hawkish Fed signals, and high valuations contributing to the ongoing sell-off. The Nifty and Sensex have lost significant ground, and RBL Bank’s struggles highlight the broader weakness in the market. With global tensions rising and uncertainty surrounding U.S. policy, investors are urged to exercise caution while navigating these turbulent times.

Bank Nifty: Down by 1.58%

The stock market took a sharp hit today, and the Bank Nifty is feeling the pressure. It opened in the red and fell 1.58%, closing at a low of 50,759.20. But it’s not just the Bank Nifty – the BSE Sensex also saw a significant decline, dropping by 1.49%, closing at 78,041.59.

The stock market’s sectorial performance today has left investors on edge. There are no significant gainers in sight, but it’s the realty sector that’s feeling the brunt of the downturn. With a staggering loss of 3.91%, this sector is undoubtedly struggling to stay afloat. With in the sector

• Macrotech Developers Ltd. plunges by -5.16%
• Prestige Estates Projects Ltd. drops by -4.92%

Foreign investors were seen pulling back from the market, as evidenced by their net sell position. The FII/FPI buy value stood at Rs 30,297.83 crore, but their sell value exceeded this figure at Rs 33,895.65 crore, resulting in a net outflow of Rs 3,597.82 crore.

Domestic Institutional Investors remained more optimistic. The DII buy value was Rs 20,119.41 crore, and their sell value was Rs 18,745.04 crore, giving them a net buy position of Rs 1,374.37 crore.

Bank Nifty

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

The gainers included ICICI Bank with a 0.40% increase.

On the other hand, the biggest losers in the sector included IDFC First Bank with a 4.73% decline, Bank of Baroda with a 3.55% decline, Axis Bank with a 3.51% decline, IndusInd Bank with a 3.47% decline, and Federal Bank with a 3.46% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 20th December, 2024

22 K Gold / g	₹ 7,040	– ₹ 30
24 K Gold / g	₹ 7,680	– ₹ 33
18 K Gold / g	₹ 5,760	– ₹ 25

Silver / g	₹ 90.50	– ₹ 1
Silver / kg	₹ 90,500	– ₹ 1,000

Rupee Hits Record Low Before Slight Recovery: Is the Worst Yet to Come?

The Indian rupee experienced a dramatic dip on Friday, hitting an all-time low before recovering slightly, though the currency’s losing streak continues. Despite a minor rebound, the rupee still ended the week on a negative note, marking its seventh consecutive week of losses. Can the rupee hold its ground, or will it keep spiraling down?

• Rupee hits a record low before modest recovery.
• Weekly losses persist with a 0.2% decline week-on-week.
• Dollar inflows provided some relief, but concerns remain.

What’s Driving the Decline? The rupee closed at 85.0150 against the U.S. dollar, slightly higher than its previous close of 85.07. However, it had initially slipped to a low of 85.10 during the session. Traders pointed to intervention by the Reserve Bank of India (RBI) as a key factor that helped cushion the rupee’s fall early in the day. But weak capital flows and concerns about India’s slowing economic growth continue to weigh on the currency.

• RBI intervention and foreign bank dollar offers helped the rupee recover somewhat.
• Weak capital flows and economic growth concerns keep the pressure on.
• Rupee weakened below the psychologically important 85 level.

Global Factors and Fed’s Impact on the Rupee Adding to the rupee’s woes, the Federal Reserve’s hawkish stance this week has further rattled market sentiment. As global markets adjust, the dollar index fell by 0.2% to 108.2, retreating from a two-year high, but other Asian currencies showed mixed results as investors await U.S. personal consumption expenditure (PCE) inflation data.

• Fed’s hawkish policy and global market uncertainty add pressure.
• Dollar index retreats, but Asian currencies remain volatile.

As the rupee’s struggle continues, all eyes are on whether the central bank’s interventions can prevent further depreciation or if the currency will face more downward pressure in the coming weeks.

Stocks Highlights

JSW Steel Ltd. has seen a slight dip today, with its share price falling by 0.59% from its previous close of Rs 925.95, settling at Rs 931.45. While this doesn’t seem like a drastic drop, it’s still a noteworthy shift in the steel giant’s stock performance. But what does this really mean for investors?

• JSW Steel Ltd. share price decreased by 0.59%.
• Last traded price: Rs 931.45.
• Intraday fact check: In the last 20 years, only 3.1% of trading sessions saw declines higher than 5%.
• Stock returns vs Nifty 100: JSW Steel delivered a 3-year return of 44.09%, slightly behind the Nifty 100’s 45.73% return.

A Closer Look at JSW’s Financials: The company’s expenses are worth noting. As of the fiscal year ending March 31, 2024, JSW Steel spent 4.63% of its operating revenue on interest expenses, while 2.62% went towards employee costs.

Tech Mahindra Ltd. is seeing a significant loss in its share price today, falling by -3.90% from its previous close of Rs 1,754.35, now trading at Rs 1,685.85. This decline has raised concerns among investors. What’s really going on?

• Tech Mahindra Ltd. share price dropped by -3.90%.
• Last traded price: Rs 1,685.85.
• Intraday fact check: Over the past 18 years, only 1.96% of trading sessions saw declines higher than 5%.
• Stock returns vs Nifty 100: Tech Mahindra returned only 9.78% over the past 3 years, while Nifty 100 saw a much higher return of 45.73%.

Troubling Financials and Signals: The company is facing a topline contraction, with sales de-growing by 2.47%. This is the first time in 3 years that Tech Mahindra has experienced a revenue contraction. To make matters worse, a sell signal appeared yesterday when its 20-day moving average crossed. Historically, this has led to an average price decline of -1.91% within 7 days over the past 5 years.

Advance Decline Ratio

Today, the advance-decline ratio was 0.21 and the market breadth was negative. The volatility index India Vix increased by 3.87 to settle at 15.07 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 478
Decliners – 2310
52Wk High – 74
52Wk Low – 70
High Band Hitters – 75
Low Band Hitters – 86
200d SMA – 23831
50d SMA – 24326
20d SMA – 24363

Top Gainers and Losers Stocks

The top gainers were Dr. Reddy (+1.49%), JSW Steel (+0.59%), ICICI Bank (+0.40%), Nestle India (+0.21%), and HDFC Life (+0.03%).

The top losers were Tech Mahindra (-3.90%), Axis Bank (-3.51%), IndusInd Bank (-3.47%), M&M (-3.24%), and Trent (-2.99%).

Top Gainers and Losers Sectors

There are no gainers in the sector today.

The top losers sectors were Realty (-3.91%), IT (-2.63%), Auto (-2.13%), Metal (-1.83%), and Media (-1.70%).

SECTORS – NOTABLE ACTION
REALTY -3.91%
IT -2.63%
AUTO -2.13%

Stocks Ban List

(SEBI) F&O ban list (BANDHANBNK close at -159.05), (GRANULES close at -592.40), (MANAPPURAM close at -181.03), (NMDC close at -213.15), (HINDCOPPER close at -271.50), (SAIL close at -116.10), and (PVRINOX close at -1382.10) 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.

PNB, LTF, CANFINHOME, ABFRL, EXIDEIND, DIXON, METROPOLIS, AARTIIND, INDUSINDBK, PEL, IGL, and BIOCON stocks has the possibilities of entrants in the ban list.

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

Daily Pivots

S2	S1	P	R1	R2
23202	23395	23730	23923	24259

As per the above pivots data, 23200 to 24100 is the Nifty 50 trading range.  

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