Stock market today: Sensex and Nifty took their losing runs to the third straight session on Wednesday, ahead of the outcome of the two-day Federal Reserve meet later today. Stock fell, as US benchmark Dow Jones plunged for the ninth straight day overnight, conceding its longest losing streak since February 1978!
The fall at Dalal Street was triggered a decline in private banking shares, with HDFC Bank Ltd, ICICI Bank Ltd and Axis Bank Ltd alone contributing over 250 points to the Sensex fall. The fall was fastened by a record low rupee, as the 10-year US bond yields continued to rise, even as the market is factoring in a 25 basis points rate cut today.
A weaker rupee triggers foreign outflows. Data showed FPIs sold equities worth Rs 6,409.86 crore on Wednesday. "The external pressure on the rupee is becoming more intense due to high US interest rates, idiosyncratic EUR weakness, and tariff risks for the yuan," HSBC said
Nomura said while the Fed is likely to cut in December review, uncertainty around its monetary policy remains elevated.
"There is likely to be some hawkish pushback against the decision to cut, and we expect another dissent from Governor Bowman. The dot plot and Powell’s press conference are likely to be hawkish, emphasising that the pace of rate cuts is likely to slow in 2025. We expect the median dots to rise 25bp across the forecast horizon, with the longer-run median also ticking up to 3 per cent," Nomura said.
Sensex fell 430 points, or 0.53 per cent, to 80,233.41. Nifty stood at 24,221.90, down 114.10 points or 0.47 per cent. Fear gauge India VIX edged 0.20 per cent higher to 14.52. Investor wealth, as suggested by the BSE market capitalisation, fell Rs 1.35 lakh crore to Rs 453.78 lakh crore, BSE data showed.
Power Grid fell 2.23 per cent to Rs 322.65. Tata Motors Ltd, ICICI Bank Ltd, Axis Bank Ltd, HDFC Bank Ltd and NTPC Ltd declined up to 1.9 per cent. State Bank of India, Adani Ports, JSW Steel Ltd and Bharti Airtel Ltd fell up to 1.1 per cent. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services:
"The near-term market construct has turned weak with FIIs turning sellers on rallies. The trend of FPI buying in early December has proved to be, as feared, a flash in the pan. Yesterday’s massive FPI sell figure of Rs 6,410 crores in the cash market indicates that more selling is in store on market bounces. The underlying reason for the FII selling in India is the outperformance of US and the underperformance of India," said V K Vijayakumar of Geojit Financial Services
While the S&P 500 is up 27.5 per cent YTD, Nifty is up only 12 per cent YTD. The fear is that this huge variation in relative performances may continue, given the strength of the US economy and the weakness in the Indian economy, Vijayakumar said adding that the situation will change if leading indicators in India suggest recovery in GDP growth and corporate earnings in Q3.
"The focus of global markets today will be the Fed decision expected tonight. A 25 bp rate cut is priced-in by the market. So, the attention will be on the Fed commentary. A significant trend in the Indian market is the outperformance of the broader market where good results are getting appreciated by the market and there is no concern of FII selling," he said.
Should you buy stocks?
ICICIdirect said the current correction offers fresh entry opportunity as risk reward ratio for Nifty is favourable at 52-week EMA after 12 per cent correction, auguring well for move towards 28,800 by 2025.