Frontline stock market indices on Thursday tumbled more than 1% primarily on account of the hawkish commentary issued by U.S. Federal Reserve hinting at two rate cuts in 2025 against the four previously announced. Also, the sell-off, believed to be led by Foreign Portfolio Investors (FPIs), caused the Indian rupee (INR) to depreciate to its all-time low of 85.1300 (spot) to U.S.$.
The INR fell over 18 paisa to a dollar from its previous close of 84.9450. This is despite the reported intervention of the Reserve Bank of India (RBI) which sold dollars to prevent the INR from a free fall.
The Indian markets as well as the global markets fell after the U.S. Fed on Wednesday announced a 25 basis points rate cut and raised its inflation forecast.
The S&P BSE Sensex plunged 964 points or 1.2% to 79,218 led by Bajaj Finserv (2.5%), JSW Steel (2.33%), Asian Paints (2.25%), Bajaj Finance (2.25%), ICICI Bank (1.83%) and Reliance (1.79%).
In the 30-share Sensex, three stocks namely IndusInd Bank, Nestle India and Asian Paints hit their 52-weeks low amid the sell-off. The markets fell for the fourth consecutive day.
The NSE Nifty-50 index too fell 247 points or 1.02% to 23,952 points. Among sectors, the Pharma and Healthcare indices rallied over 1% while the IT, Defence, and financial indices shed over 1%.
Analysts said the market fell due to concerns of reduced FII inflows going forward. The broader markets were less impacted. The BSE Midcap was down 0.30% and the BSE Smallcap was down 0.28%.
Nandish Shah, Senior Derivative & Technical Research Analyst, HDFC Securities said, “Nifty fell for the fourth session on the trot. After gap-down opening of 321 points, Nifty recouped some of its opening losses in the early morning trade. However post 10 A.M., there was hardly any directional move.”
He said the declining shares outnumbered the advancing shares for the third day in the row where advance-decline ratio stood at 0.74 on BSE.
“All the sectoral Indices ended in the red except Nifty Pharma. Amongst them, Nifty IT, Nifty Financial services and consumer durables fell the most,” he said.
“Market participants are keeping an eye on Bank of England policy meeting and Q3 US GDP numbers due later on Thursday,” he added.
Commenting on the INR, Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan said, “The Indian Rupee breached the 85 mark for the first time and fell to a new record low on Thursday on weak domestic markets and strong U.S. Dollar. Other Asian currencies too declined. U.S. Dollar surged on more hawkish than expected Fed projections.”
“We expect INR to trade with a negative bias on global equities following a hawkish Fed and a strong Dollar. Concerns over slowdown in the economy may further weigh on the INR. However, weak crude oil prices may support the INR at lower levels. Any intervention by the RBI may also support the INR. US$-INR spot price is expected to trade in a range of 84.9 to 85.25,” he added
Published – December 19, 2024 09:30 pm IST
