Nifty Takes a Hard Hit: Why Markets Are on Edge Ahead of Fed’s Rate Decision

NiftyTrader • December 18, 2024

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Index	Price	Change	% Chg
Nifty 50	24,198.85	-137.15	-0.56%
Nifty MidCap 50	16,381.35	-108.70	-0.66%
Nifty SmallCap 50	9,217.15	-82.45	-0.89%
Nifty Bank	52,139.55	-695.25	-1.32%
Nifty Financial	24,198.35	-300.55	-1.23%
BSE SENSEX	80,182.20	–502.25	–0.62%

At the close, the Nifty 50 was at 24,198.85 down by 0.56%

Is the Indian stock market bracing for more losses, or is there hope for a rebound?

The Nifty 50 slipped into the red once again, extending its losing streak for a third consecutive day. On December 18, the benchmark index closed down by 0.56%, marking a tough day for investors. The tension is mounting as all eyes are on the US Federal Reserve’s key interest rate decision, which is expected later tonight.

The rupee has also been under pressure, further compounding the uncertainty in the markets. Could the Fed’s actions bring relief, or are we heading into even more challenging times? Investors are watching with bated breath.

Key Takeaways:

Nifty 50 ended the session at 24,198.85, down by 137.15 points.
The index has been in a downward trend for three days in a row.
Market sentiment is clouded by uncertainty ahead of the Fed’s rate decision.
Sector performance: Banking, auto, and energy stocks dragged the market down, while healthcare and IT stocks showed some resilience.

What’s Behind the Nifty’s Struggles?

The market opened in the red and stayed there throughout the session, with the Nifty 50 testing an intraday low of 24,150 before recovering slightly to close at 24,199. The fear ahead of the US Federal Reserve’s monetary policy is tangible, and investors are exercising caution.

Caution ahead of the Fed meeting: Investors are waiting to see if the Fed will implement a 25 bps rate cut and what its commentary on future economic policies will be. This has led to profit booking across sectors.
Weakness across sectors: Banking, auto, and energy stocks were the primary contributors to the market’s downturn.
Nifty technicals: The Nifty remains below its 100-day exponential moving average (100-DEMA), signaling weakness in the index. It also formed a bearish candlestick pattern, which indicates selling pressure at higher levels.

Key Points:

The Nifty closed at 24,199, down 137 points.
The index formed a bearish candlestick pattern, signaling continued weakness.
Market caution is high due to the Fed meeting and global economic pressures.

Can the Nifty Recover?

While the Nifty ended in negative territory, there’s still a glimmer of hope. If the index manages to hold the crucial 24,150 level, a pullback to 24,350 could be on the cards. However, for any substantial upward movement, the index must sustain above the 100-DEMA at 24,360.

Support at 24,150: If the Nifty holds above this level, it could potentially reverse some of its losses.
Caution advised: As long as the Nifty stays below 24,360, traders should remain cautious.

Key Takeaways:

The 24,150 level is critical for a potential recovery.
The 100-DEMA at 24,360 remains a key resistance.
Investors are advised to adopt a cautious approach until the market shows clear signs of stability.

What’s Driving the Market Down?

The Indian markets are facing significant headwinds, and a big part of the pressure comes from foreign institutional investors (FIIs) who have been selling off stocks. Over the last two sessions, FIIs sold nearly Rs 6,689 crore in the cash market, adding to the negative sentiment.

Global uncertainty: The markets are in a cautious mood as investors brace for the outcome of the US Federal Reserve’s rate decision. The Fed’s stance on inflation and growth will have global implications.
Sluggish domestic growth: The Indian rupee hit a fresh low of 84.94 against the dollar, contributing to concerns over inflation and a widening trade deficit.

Key Takeaways:

FIIs selling off stocks is a key driver of the market weakness.
The rupee’s depreciation is putting additional pressure on Indian equities.
Investors are focused on the Fed’s policy decisions and how they will impact global markets.

Looking Ahead: What’s Next for the Market?

The market has been in downward mode for three days, and there is a chance of sideways consolidation after the Fed’s rate decision. With a 25 bps rate cut priced in, the next move will depend on the Fed’s forward guidance and its outlook on inflation and growth.

Post-Fed recovery?: There is a possibility of a bounce-back in the indices after the Fed’s meeting, especially if the central bank signals a slower pace of rate cuts in the future.
Focus on inflation: The Fed’s inflation outlook will be crucial, as stubborn inflation could keep markets on edge.

Key Points:

After the Fed decision, the market could see a bounce-back if the tone is dovish.
Inflation guidance from the Fed will be a critical factor for future market direction.
Global economic headwinds will continue to impact investor sentiment.

The Nifty 50 and the broader market are at a critical juncture. With Fed’s rate decision looming, investors are waiting for clearer signs before making their next move. Keep an eye on 24,150 for support, but exercise caution until we see a definitive trend emerge. The coming days could shape the future direction of Indian stocks.

Bank Nifty: Down by 1.32%

Bank Nifty and the BSE Sensex closing in the red. The Bank Nifty opened with a negative gap and continued to slide throughout the session, ending the day down by 1.32% at 52,139.55. The BSE Sensex mirrored this trend, dipping by 0.62% and closing at 80,182.20.

In the sectorial front, Pharma stocks have gained 0.25%, showing remarkable strength in a time when many other sectors are struggling. But the spotlight is firmly on two key players: Mankind Pharma Ltd., which has surged by 4.82%, and Aurobindo Pharma Ltd., up by 2.89%.

On the flip side, Media stocks have taken a brutal hit, with the sector dropping by 2.24%. But the real shock lies within two major companies in this sector: PVR INOX Ltd., which lost 5.93%, and Zee Entertainment Enterprises Ltd., which saw a loss of 2.73%.

Foreign Institutional Investors (FII) have shown a more cautious stance, recording a net outflow of Rs. 1,316.81 crore. While the buy value stood at Rs. 13,345.20 crore, the sale value surged higher at Rs. 14,662.01 crore.

Domestic Institutional Investors (DII) have remained bullish, with a net inflow of Rs. 4,084.08 crore. The DII’s buy value amounted to Rs. 14,068.09 crore, significantly higher than their sale value of Rs. 9,984.01 crore.

Bank Nifty

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

The gainers included IDFC First Bank with a 1.68% increase.

On the other hand, the biggest losers in the sector included Federal Bank with a 5.09% decline, Punjab National Bank with a 2.80% decline, Bank of Baroda with a 1.99% decline, Canara Bank with a 1.67% decline, and ICICI Bank with a 1.26% decline. These results suggest that all of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 18th December, 2024

22 K Gold / g	₹ 7,135	– ₹ 15
24 K Gold / g	₹ 7,784	– ₹ 16
18 K Gold / g	₹ 5,838	– ₹ 12

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

Will the Rupee Hit 85 Against the Dollar? Is India Ready for the Storm?

The Indian Rupee is sinking fast – are we about to see an all-time low against the dollar?

On December 18, the Indian rupee took a sharp plunge, hitting a new low of 84.94 against the US dollar, just shy of the 85 mark. With the rupee’s continued fall, questions arise: Is the Indian currency on the verge of reaching a terrifying 85 against the dollar? And what does this mean for India’s economy?

Key Points to Note:

Rupee hits 84.94 against the dollar, nearing an all-time low of 85.
The rupee opened at 84.92, 2 paise lower than the previous close.
This steep decline is driven by pressure from foreign outflows, trade deficits, and global economic factors.
US Federal Reserve’s meeting could trigger another round of economic uncertainty.
Foreign exchange reserves are shrinking, falling by over $46 billion in two months.

What’s Behind the Rupee’s Sharp Descent?

The rupee’s fall is not a sudden event but the result of months of pressure. On December 18, the currency dropped to 84.94, a level that puts it dangerously close to the 85 mark.

Global economic forces are weighing heavily on the rupee, with the US Federal Reserve meeting being a significant factor. Investors are bracing for a 25 basis points rate cut, which could further impact the rupee’s value.
Trump’s trade war rhetoric continues to add strain. His recent tweets on imposing tariffs on India and other countries have rattled Asian currencies, contributing to the rupee’s downfall.

Important Points:

The rupee is under pressure due to external economic factors, including US policy decisions and trade tensions.
Investors are expecting a 25 bps rate cut from the US Federal Reserve.
Trump’s tariff talks continue to influence Asian currencies, especially the rupee.

What’s at Stake? The Impact on India’s Economy

The rupee’s depreciation comes at a critical time. Not only are foreign investors pulling out, but India’s trade deficit has also widened. The country’s economic growth remains sluggish, adding fuel to the fire.

The Reserve Bank of India (RBI) is now in a tough spot, intervening in the currency market to prevent further collapse. But there’s a cost: India’s foreign exchange reserves have taken a major hit, dropping by over $46 billion in just two months.

India’s forex reserves plummeted from $704.885 billion in October to $654.857 billion in December.
The RBI’s interventions to stabilize the rupee are depleting the nation’s precious reserves, increasing concerns over India’s financial stability.

Key Takeaways:

The trade deficit and sluggish growth numbers are putting additional pressure on the rupee.
The RBI’s intervention in the currency market is draining India’s foreign exchange reserves.
India faces growing challenges as the rupee continues to weaken, pushing the nation to the brink of a financial storm.

Looking Ahead: What’s Next for the Rupee and India’s Economy?

The Indian rupee is on a dangerous trajectory, nearing the 85 mark against the dollar. As the world watches closely, the outcome of the US Federal Reserve meeting and ongoing trade tensions will likely play a crucial role in determining the rupee’s fate.

Will the RBI’s efforts be enough to stop the rupee’s decline, or is India headed for a financial crisis? Only time will tell, but the coming days and weeks could be pivotal for India’s economy.

Important Points:

The rupee is nearing an all-time low of 85 against the dollar.
The US Federal Reserve and Trump’s trade war continue to add pressure on the currency.
The RBI’s interventions are depleting foreign reserves, and the economy faces growing instability.

Stocks Highlights

Trent Ltd.: A Stellar Rise, but Is It Sustainable?

Trent Ltd. is making waves with a solid 2.48% increase in its share price, rising from its previous close of Rs 6,941.65 to Rs 7,113.65. However, it’s not all sunshine and rainbows—there’s more to this rise than meets the eye. With a 36.55% ROE for the year ending March 31, 2024, Trent is vastly outperforming its 5-year average ROE of 14.67%. Investors are likely cheering, but the 50-day moving average crossover signal from yesterday has raised concerns. Historically, such crossovers have led to an average price decline of -5.22% within 30 days.

Trent Ltd. Share Price Increase: +2.48%, from Rs 6,941.65 to Rs 7,113.65
ROE Outperformance: 36.55% vs 5-year average of 14.67%
Sell Signal: 50-day moving crossover appeared, typically leading to a -5.22% decline in 30 days
Interest & Employee Expenses: 2.58% towards interest expenses and 8.38% towards employee cost for FY 2024

Tata Motors Ltd.: A Downward Spiral Amid Strong Fundamentals

On the other hand, Tata Motors Ltd. is facing a -2.92% drop in its share price, falling from Rs 779.75 to Rs 757.00. Despite the price drop, the company is outperforming in several key areas. With an ROE of 36.97% for the year ending March 31, 2024, Tata Motors is significantly surpassing its 5-year average of -1.07%. Additionally, its annual revenue growth has been robust, coming in at 26.61%, outperforming its 3-year CAGR of 20.47%.

Tata Motors Share Price Decline: -2.92%, from Rs 779.75 to Rs 757.00
ROE Outperformance: 36.97% vs 5-year average of -1.07%
Revenue Growth: 26.61% YoY, surpassing 3-year CAGR of 20.47%
Interest & Employee Expenses: 2.28% towards interest expenses and 9.7% towards employee cost for FY 2024

Advance Decline Ratio

Today, the advance-decline ratio was 0.42 and the market breadth was negative. The volatility index India Vix decreased by 0.77 to settle at 14.37 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 827
Decliners – 1960
52Wk High – 94
52Wk Low – 34
High Band Hitters – 78
Low Band Hitters – 80
200d SMA – 23814
50d SMA – 24375
20d SMA – 24349

Top Gainers and Losers Stocks

The top gainers were Trent (+2.48%), Dr. Reddy (+2.34%), Cipla (+1.39%), Wipro (+1.00%), and Reliance (+0.73%).

The top losers were Tata Motors (-2.92%), Power Grid (-2.46%), BEL (-1.95%), NTPC (-1.83%), and JSW Steel (-1.77%).

Top Gainers and Losers Sectors

The top gainer sectors were Pharma (+1.09%), and IT (+0.25%).

The top losers sectors were Media (-2.24%), Metal (-1.36%), Financial Services (-1.23%), Oil & Gas (-0.84%), and Auto (-0.75%).

SECTORS – NOTABLE ACTION
PHARMA +1.09%
IT +0.25%
MEDIA -2.24%
METAL -1.36%
FINANCIAL SERVICES -1.57%

Stocks Ban List

(SEBI) F&O ban list (BANDHANBNK close at +163.95), (PVRINOX close at -1408.45), (CHAMBLFERT close at -524.15), (GRANULES close at +596.80), (MANAPPURAM close at -178.77), (HINDCOPPER close at -280.95), (SAIL close at -119.81), (RBLBANK close at -165.88), and (NATIONALUM close at +226.88) 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, DIXON, ABFRL, IGL, LTF, AARTIIND, EXIDEIND, NMDC, MGL, INDUSINDBK, GNFC, and BIOCON stocks has the possibilities of entrants in the ban list.