Nifty Below 24,000: What’s Driving the Stock Market Down? Is the Worst Yet to Come?

NiftyTrader • December 19, 2024

Post Views: 431

Index	Price	Change	% Chg
Nifty 50	23,951.70	-247.15	-1.02%
Nifty MidCap 50	16,322.75	-58.60	-0.36%
Nifty SmallCap 50	9,178.45	-38.70	-0.42%
Nifty Bank	51,575.70	-563.85	-1.08%
Nifty Financial	23,906.60	-291.75	-1.21%
BSE SENSEX	79,218.05	–964.15	–1.20%

At the close, the Nifty 50 was at 23,951.70 down by 1.02%

The Indian stock market took a heavy blow today as the NSE Nifty 50 dropped by 1.02%, closing below the critical 24,000 mark. This marks a worrying sign as investors were spooked by a series of global and domestic factors. Notably, the Federal Reserve’s recent statement and global market weakness led to a massive Rs 2.6 lakh crore loss in market capitalization across all listed companies on the BSE.

So, what’s driving this decline? IT and metal stocks led the sell-off, while a rise in the US dollar and bond yields further dampened sentiment. Amid these volatile conditions, foreign institutional investors (FIIs) have continued selling Indian equities, further adding to the market’s struggles. Let’s dive deeper into the story behind Nifty’s fall below 24,000.

Key Highlights:

Nifty closed below 24,000, losing 1.02%.
Rs 2.6 lakh crore wiped out in market capitalization.
IT and metal stocks led the market decline.
FII selling continues, and global market weakness adds pressure.

“Fed Forecast Shakes the Market: Why the US Rate Cuts Are Not Coming as Expected”

The dramatic drop in Indian stocks follows the US Federal Reserve’s statement regarding its future plans on interest rates. While it announced a 25-basis-point rate cut, its projection of just two rate cuts in 2025—down from the previously anticipated four cuts—has sent shockwaves through the market. This has raised concerns that the era of low interest rates might be coming to an end sooner than expected, triggering a wave of sell-offs in global markets, including India.

The hawkish stance of the Fed has led to a global market retreat, with US stocks plummeting and major Asian indices such as Japan’s Nikkei 225, Hong Kong’s Hang Seng, and China’s CSI 100 all facing losses. Similarly, Nifty closed below the psychological 24,000 level, with Sensex crashing more than 950 points.

Key Points:

US Fed signals fewer rate cuts in 2025.
Global sell-off follows as markets react to hawkish Fed stance.
Nifty breached the 24,000 level, following the US market’s plunge.

“The US Dollar Strengthens, and Bond Yields Rise: How These Factors Are Impacting Indian Markets”

As expected, the strengthening of the US dollar and rising bond yields have further aggravated the situation. The US 10-year bond yield surged to 4.52%, and the US Dollar Index reached a two-year high of 108.3, weighing on global investor sentiment. This has made US assets more attractive, triggering capital outflows from emerging markets like India.

With foreign institutional investors (FIIs) continuing their selling spree, FIIs sold Rs 1,316.81 crore worth of Indian stocks on December 18, 2024. The heightened bond yields and a stronger dollar have reduced the attractiveness of Indian equities, intensifying market weakness. However, analysts believe this selling trend might be temporary.

Key Points:

US dollar strengthens, and bond yields rise, triggering global sell-offs.
FII selling continues, with Rs 1,316.81 crore worth of shares sold on December 18.
Capital outflows impact Indian stocks amid rising US bond yields and a stronger dollar.

“Nifty’s Next Moves: Can It Bounce Back or Is the Market Heading for Further Downside?”

The big question now is: Can Nifty recover from this slump? According to market experts, Nifty’s next support is around the 23,700 level, driven by the 200-day exponential moving average (DEMA). If the index falls below this key level, the downside could be even more significant, with targets as low as 23,500 or even 23,300.

However, there are still resilient sectors offering hope. Defensive sectors like pharma have outperformed in recent days, making them a safe haven for investors seeking refuge from the broader market turmoil. Despite the broader weakness, there could still be buying opportunities in select stocks.

Key Points:

23,700 could be a crucial support level for Nifty.
Defensive sectors like pharma might provide buying opportunities.
Market weakness could continue if key support levels are breached.

“What’s Next for the Indian Stock Market in 2025? Moderation in Returns Expected”

As we near the end of 2024, market experts predict that 2025 might bring more moderation in returns. According to Prime Securities, the Nifty might struggle to deliver double-digit returns in the coming year. With a forecasted 6.5% GDP growth, stock returns are likely to remain muted in 2025.

Key sectors that are expected to do well include IT products, infrastructure, and sustainability-driven investments. Investors will need to take a more bottom-up approach, focusing on stock-specific strategies rather than relying on broader market performance.

Key Points:

Moderation in returns expected in 2025.
Focus on stock-specific strategies and defensive sectors.
IT products, infrastructure, and sustainability may outperform.

“The Broader Impact: Central Banks and Global Growth”

As inflationary pressures persist, central banks across the globe—including the Bank of England—are finding it challenging to balance interest rate hikes with growth concerns. Economies like the US and India are focusing on curbing inflation while ensuring economic growth. In the US, the Federal Reserve’s guidance on inflation and rate cuts for 2025 suggests persistent price pressures, which could keep global markets on edge throughout the year.

In India, the Reserve Bank of India (RBI) has also increased its CPI inflation forecast to 4.8%, a sign of the challenges ahead. With these factors in play, the next few months could see continued volatility, making it crucial for investors to stay informed and adapt to changing market dynamics.

Key Points:

Central banks are balancing inflation control with growth.
US Fed and RBI revise inflation projections.
Global markets will remain volatile as inflation and rate hikes take center stage.

“What Are the Key Drivers Behind This Market Correction? Here’s What You Need to Know”

Fed’s Reduced Rate Cut Projections: The US Federal Reserve’s decision to forecast fewer rate cuts has significantly impacted global markets. Expectations of low interest rates had kept markets buoyant, and the Fed’s revised stance has now raised concerns about future economic growth.
Rising Bond Yields and Stronger Dollar: The rise in US bond yields and a stronger US dollar have triggered capital outflows from emerging markets, including India, dampening the market sentiment.
FII Selling: Foreign institutional investors have continued their selling spree, pulling out substantial amounts from the Indian stock market.
Global Market Weakness: The global sell-off, triggered by the US Fed’s hawkish stance, has left global indices, including Indian benchmarks, struggling to maintain positive momentum.
Nifty’s Technical Levels: Nifty has breached the critical 24,000 support, and analysts suggest that 23,700 and 23,500 could be the next crucial support levels. A break below these levels could open the door for further downside.

Key Points:

Reduced Fed rate cuts and rising bond yields have triggered global market weakness.
FII selling continues, and technical levels suggest further downside for Nifty.
Global sell-off leaves markets under pressure, and investors need to stay vigilant.

In conclusion, the Indian stock market is facing a series of challenges, including a hawkish Fed, FII selling, and global market weakness. While some sectors like pharma show resilience, broader market conditions remain volatile. Investors should carefully monitor key technical levels and adjust their strategies for 2025. It’s clear that the road ahead might be tougher, but opportunities still exist for those ready to navigate these turbulent times.

Bank Nifty: Down by 1.08%

Bank Nifty opened in the red, down by 1.08%, and closed at 51,575.70, reflecting a bearish sentiment among banking stocks. Similarly, the BSE Sensex also ended the day in the negative, down by 1.20%, closing at 79,218.05, marking a significant pullback from its previous highs.

In the sectorial front, the Pharma sector rose sharply by 1.72%. But what’s even more jaw-dropping is the performance of IPCA Laboratories Ltd., which saw an impressive surge of 5.37%. Meanwhile, Dr. Reddy’s Laboratories Ltd. also made a notable leap with a 4.04% gain.

The IT sector seems to be facing some troubling signs. It’s the biggest loser, slipping by 1.26%. LTIMindtree Ltd. took the hardest hit, plunging by 5.29%, while MphasiS Ltd. wasn’t far behind, with a drop of 2.16%.

Foreign Institutional Investors (FII) were net sellers in the market, with a total sale value of Rs 16,910.33 crore, compared to their buy value of Rs 12,685.41 crore. This resulted in a net outflow of Rs 4,224.92 crore.

Domestic Institutional Investors (DII) showed a more optimistic outlook. The buy value of DIIs stood at Rs 14,699.53 crore, while their sales amounted to Rs 10,756.29 crore, resulting in a net buying value of Rs 3,943.24 crore.

Bank Nifty

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

The gainers included IDFC First Bank with a 0.68% increase, Punjab National Bank with a 0.36% increase, and Federal Bank with a 0.23% increase.

On the other hand, the biggest losers in the sector included ICICI Bank with a 1.88% decline, AU Bank with a 1.57% decline, Axis Bank with a 1.02% decline, Kotak Bank with a 0.93% decline, and Bank of Baroda with a 0.93% decline. These results suggest that some of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 19th December, 2024

22 K Gold / g	₹ 7,070	– ₹ 65
24 K Gold / g	₹ 7,713	– ₹ 71
18 K Gold / g	₹ 5,785	– ₹ 53

Silver / g	₹ 91.50	– ₹ 1
Silver / kg	₹ 91,500	– ₹ 1,000

Stocks Highlights

Dr. Reddy’s Laboratories Ltd. has shocked the market with a strong 4.04% surge in its stock price, closing at Rs 1,326.90, up from Rs 1,275.40. But what’s behind this impressive rise? The stock has displayed rare intraday gains—only 1.05% of the time in the last 20 years has it surged by more than 5% in a single session. But that’s not all. This pharma giant has delivered a Return on Equity (ROE) of 19.74% for the fiscal year ending March 31, 2024—outperforming its 5-year average of 15.62%. Bulls are charging ahead, with the 200-day moving average crossover appearing just yesterday, signaling a potential 4.17% average gain within the next 30 days.

Dr. Reddy’s share price surged by 4.04%, closing at Rs 1,326.90.
Rare intraday gains: Only 1.05% of the time in the last 20 years has the stock gained over 5% in a day.
ROE of 19.74% for the year ending March 31, 2024, outperforming the 5-year average of 15.62%.
Bulls in control: A 200-day moving average crossover signals a potential 4.17% gain in the next 30 days.
Low-interest expenses: Less than 1% of operating revenues spent on interest, with 17.96% spent on employee costs.

Bajaj Finserv Ltd., on the other hand, has taken a sharp downturn of -2.33%, closing at Rs 1,592.80 from Rs 1,630.75. Despite a strong annual revenue growth of 34.5%, Bajaj Finserv has underperformed in comparison to the broader market. Over the last 3 years, the stock’s returns have been dismal, with only a 0.64% return, while the Nifty 100 has surged by 46.8%. On top of that, a 200-day moving average crossover on Dec 17, 2024, is sending a sell signal, indicating a possible -3.44% decline over the next 30 days.

Bajaj Finserv share price dropped by -2.33%, closing at Rs 1,592.80.
Revenue growth of 34.5%, outperforming the 3-year CAGR of 21.89%.
Sell signal: 200-day moving average crossover suggests a possible -3.44% decline in the next 30 days.
Underperformed market: 3-year return of 0.64%, compared to the Nifty 100’s 46.8% return.
High-interest expenses: Spent 16.67% of operating revenues on interest, with 9.39% allocated to employee costs.

Advance Decline Ratio

Today, the advance-decline ratio was 0.58 and the market breadth was negative. The volatility index India Vix increased by 0.95 to settle at 14.51 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1024
Decliners – 1761
52Wk High – 76
52Wk Low – 50
High Band Hitters – 82
Low Band Hitters – 80
200d SMA – 23823
50d SMA – 24354
20d SMA – 24379

Top Gainers and Losers Stocks

The top gainers were Dr. Reddy (+4.04%), Cipla (+2.15%), BPCL (+2.05%), Sun Pharmaceutical (+1.12%), and Apollo Hospitals (+1.04%).

The top losers were Bajaj Finserv (-2.33%), JSW Steel (-2.31%), Bajaj Finance (-2.25%), Grasim (-2.20%), and Asian Paint (-2.15%).

Top Gainers and Losers Sectors

The top gainer sectors were Pharma (+1.72%).

The top losers sectors were IT (-1.26%), Financial Services (-1.21%), Consumer Durables (-1.10%), Metal (-1.02%), and Media (-0.89%).

SECTORS – NOTABLE ACTION
PHARMA +1.72%
IT -1.26%
FINANCIAL SERVICES -1.21%
CONSUMER DURABLES -1.10%

Stocks Ban List

(SEBI) F&O ban list (NMDC close at +214.12), (BANDHANBNK close at -163.17), (GRANULES close at +600.05), (MANAPPURAM close at +183.68), (HINDCOPPER close at -279.65), (SAIL close at -118.91), (PVRINOX close at +1421.25), (CHAMBLFERT close at +527.35), (RBLBANK close at -164.33), and (NATIONALUM close at -220.87) 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, CANFINHOME, METROPOLIS, LTF, ABFRL, DIXON, AARTIIND, EXIDEIND, INDUSINDBK, MGL, BIOCON, IGL, GNFC, and PEL stocks has the possibilities of entrants in the ban list.