Indian shares fell on Thursday after the Federal Reserve forecast fewer interest rate cuts in 2025. The Fed’s hawkish outlook dampened foreign investors’ risk appetite for local equities. The Nifty 50 declined 1.02% to 23,951.7 points, while the BSE Sensex dropped 1.2% to 79,218.05.
? Nifty declines for 4th session; Bajaj Finserv, JSW Steel drag most
Here's how the market panned out today! ⬇️ pic.twitter.com/vHWoj0hF4s
— ET NOW (@ETNOWlive) December 19, 2024
Both indexes closed below their 50-day averages for the third straight session.
#MarketAlert | Nifty hovers around 23,950 mark to trade in red
Nifty Pharma only sectoral gainer, continues to trade in green
Nifty Realty top sectoral loser, down 1.5% dragged by Macrotech Developers and Prestige Estates#Nifty #StockMarket pic.twitter.com/2yvgUWKD8x
— ET NOW (@ETNOWlive) December 19, 2024
The Fed delivered a widely expected 25 basis points rate cut but forecast just two reductions in 2025, half of what policymakers anticipated in September. U.S. rate cuts tend to help emerging markets such as India, as they can boost foreign inflows.
If #Nifty falls another 30 points and sustains below those levels till end of the month
Then markets will do something they have not done for the last 30 years
i.e. Be negative for the month in all three months of last quarter of the year i.e. October, November and December— sandip sabharwal (@sandipsabharwal) December 18, 2024
“Lower pace of rate cuts result in foreign investors going into a ‘risk-aversion’ mode and reduce inflows in emerging markets like India. Hence, markets have seen selling pressure today,” said Siddhartha Khemka, head of research of wealth management at Motilal Oswal Financial Services.
Fed’s outlook dampens Indian markets
Indian benchmarks have lost over 3% each this week and are set for their first weekly decline in five. Foreigners offloaded stocks worth a net 80.06 billion rupees ($941.2 million) up to Wednesday. Financials and IT stocks were the sectoral decliners, falling 1.2% and 1.3%, respectively.
BSE #Sensex and NSE Nifty opened on a weak note today. Here's why ⤵️#StockMarket https://t.co/uWn4dbcAbK
— News9 (@News9Tweets) December 19, 2024
Indian IT firms are particularly sensitive to U.S. interest rates, as they earn a significant chunk of their revenue from the region. Metals shed 1%, tracking global peers, due to a stronger dollar, which makes it more expensive for other currency holders to buy greenback-priced commodities. The more domestically focussed small caps and mid caps slipped 0.5% and 0.3%, respectively.
ICICI Bank led losses among the top five Nifty 50 heavyweights, closing 2% lower. Bucking the trend, generic drugmaker Dr Reddy’s Laboratories ended 4% higher after Nomura upgraded the stock to “buy” from “neutral”. Healthcare tech services provider Inventurus Knowledge Solutions ended 48% higher in its trading debut.
