On December 16, 2024, the global stock markets faced considerable declines, as investors reacted to various economic indicators and geopolitical uncertainties. The Indian stock exchanges, particularly the BSE Sensex and NSE Nifty, experienced downward pressure, closing significantly lower amid fears of potential interest rate changes by the US Federal Reserve.
The BSE Sensex settled down at 81,748.57, reflecting a drop of 384.55 points or 0.47%, whereas the NSE Nifty50 finished at 24,668.25, down 100.05 points or 0.40%. This decline was largely attributed to weak performances from the metal and information technology sectors, which felt the brunt of the bearish investor sentiment stemming from sluggish economic data globally.
Traders noted the influence of weak data from China, which did not paint an optimistic picture for economic recovery. Reports indicated mixed performance, with key sectors such as semiconductors seeing significant losses. For example, Semiconductor Manufacturing International Corp. saw its stock drop by 1.8% as investors remained wary of growth prospects amid concerns over the pace of stimulus measures.
The cautious market atmosphere was amplified by anticipation surrounding the Federal Reserve's upcoming policy meeting. Vinod Nair, Head of Research at Geojit Financial Services, emphasized the prevailing uncertainty: "The national market traded within range as investors braced for the US Federal Reserve's upcoming interest rate decision, expected December 18, 2024."
Adding to the investor anxieties, the rupee edged lower against the US dollar, closing at around 84.8850. This dip reflected broader market movements and indications of weak global cues, with the Indian currency reflecting investor concerns over international trade and foreign investments.
Despite the overall downward trend, there were pockets of resilience. The Nifty Realty sector saw substantial gains, increasing by over 3% as investors anticipated promising housing demands and potential easing of regulations. This performance highlighted the variability within sectors, with important gains for stocks like Oberoi Realty, which was among the top gainers on this trading day.
On the global front, the markets remained subdued as Wall Street had closed lower the previous Friday, with the S&P 500 and Dow Jones Industrial Average both reflecting investor hesitance due to potential economic policy shifts. The upcoming Fed meeting, expected to announce a 25 basis point cut, left many analysts speculating about longer-term economic impacts.
Further exacerbated by external pressures, many investors remain doubtful, particularly surrounding the recent developments with US President-elect Donald Trump’s administration, where potential tariff policies on key trading partners have added layers of complexity to market predictions.
Despite the pressures, some sector stocks managed to stand out positively. For example, Swiggy experienced remarkable surges, with its stock price climbing 15% after receiving optimistic evaluations from analysts, highlighting the company’s strong position within the rapidly growing e-commerce foods sector. Similarly, Paytm also reported gains, crossing the ₹1,000 threshold and marking its highest trading point since January 2022.
Looking at market breadth, the Nifty Midcap 100 index managed to outperform, gaining 0.77%, reflecting some investor confidence within smaller-cap stocks. This was echoed by the broader market trends, where approximately 2,346 shares climbed compared to 1,796 shares declining on the BSE.
Analysts suggest keeping close tabs on the forthcoming Fed announcement, as the anticipated changes could significantly dictate market movements. The growing consensus is leaning toward continued volatility, especially as many investors remain on edge about the financial ramifications of geopolitical events and changes within significant economic powers like the US and China.
Foreign institutional investors (FIIs) showed signs of renewed interest, as reports indicated purchases worth ₹14,435 crore within December, marking an encouraging turnaround after two months of cautious selling. This rebound could reflect shifting sentiments as investors re-assess amid global economic pressures.
Overall, as markets closed on December 16, the prevailing sentiment was one of cautious anticipation, with traders and investors bracing for broader economic announcements, which are expected to shape the remaining trading days of 2024.
