Markets slide on Fed meeting anticipation and global headwinds
Stock markets concluded Wednesday’s trading session on a bearish note, with benchmark indices experiencing a third consecutive day of profit booking ahead of the crucial US Federal Reserve monetary policy meeting. The Sensex tumbled 502.25 points or 0.62 per cent to close at 80,182.20, while the Nifty 50 dropped 137.15 points or 0.56 per cent to settle at 24,198.85.
The market sentiment remained cautious, driven by multiple factors including anticipated US monetary policy decisions, global economic uncertainties, and domestic economic indicators. Vinod Nair, Head of Research at Geojit Financial Services, highlighted the market’s complex landscape, stating, “The Indian market is experiencing a breakdown in the early Santa Claus rally, with the impact being more pronounced in India compared to developed markets due to the rapid appreciation of the dollar.”
Sectoral performance revealed a mixed but predominantly negative trend. While the Pharma index gained over 1 per cent, other sectors like Media shed over 2 per cent. Top gainers included Trent (2.48 per cent), Dr Reddy’s (2.34 per cent), Cipla (1.39 per cent), Wipro (1 per cent), and Reliance (0.73 per cent). Conversely, top losers were Tata Motors (-2.92 per cent), Power Grid (-2.46 per cent), BEL (-1.95 per cent), NTPC (-1.83 per cent), and JSW Steel (-1.77 per cent).
Broader market indices also reflected the overall weakness. The Nifty Next 50 declined 1.30 per cent, the Nifty Midcap Select dropped 0.45 per cent, the Nifty Bank fell 1.32 per cent, and the Nifty Financial Services index decreased by 1.23 per cent.
Market breadth indicated significant selling pressure, with 2,563 stocks declining compared to 1,442 advancing. Notably, 246 stocks hit 52-week highs, while 38 touched 52-week lows.
Prashanth Tapse from Mehta Equities explained the market dynamics: “Investors shunned stocks led by banking ahead of the outcome of the US rate decision, with focus on the Fed chairman’s commentary on inflation and growth outlook.”
The market’s technical landscape also suggests continued caution. Shrikant Chouhan from Kotak Securities noted, “Technically, the market experienced selling pressure at higher levels… the Nifty Index closed below the 20-day SMA, which is largely negative for the short term.”
An interesting highlight of the day was the stellar performance of IPO debutants. Online payments firm Mobikwik surged 89.25 per cent, budget retailer Vishal Mega Mart jumped 43.5 per cent, and drugmaker Sai Life Sciences rose 39.3 per cent on their first trading day.
The Indian rupee continued its downward trajectory, hitting a fresh record low of 84.95 against the US dollar, further dampening market sentiment.
Investors are now closely watching the Federal Reserve’s monetary policy meeting, with expectations of potential rate cuts and insights into the economic outlook. Ameya Ranadive, Senior Technical Analyst at StoxBox, emphasised, “Investors are anticipating a 25bps rate cut today… the market’s direction will largely depend on the Fed’s signals.”
As markets await the Federal Reserve’s decision, traders and investors remain cautiously positioned, with the potential for significant market movements in the coming sessions.