Market Ahead: Things that will decide stock market action on Thursday

The Indian stock market closed lower on Wednesday, as caution dominated trading ahead of Nifty's Thursday weekly expiry and the U.S. Federal Reserve's upcoming interest rate decision. Heavy selling pressure on major lenders such as HDFC Bank and ICICI Bank weighed on market indices. The benchmark BSE Sensex dropped by 502.25 points, or 0.62%, to settle at 80,182.20, while the Nifty 50 index lost 137.15 points, or 0.56%, closing at 24,198.85.

Vinod Nair, Head of Research at Geojit Financial Services, noted that the Indian market is facing a breakdown in the early Santa Claus rally, with the impact being more significant in India due to the rapid appreciation of the dollar. Market sentiment remains cautious ahead of the U.S. Federal Open Market Committee (FOMC) meeting and potential policy shifts from the incoming U.S. administration. Additionally, India's premium valuation, which is higher than the current earnings growth trajectory, and the widened November trade deficit are contributing to the negative sentiment.

In the U.S., stock indexes were mostly steady as Wall Street awaited the Federal Reserve's rate decision, which is expected to shape market direction for the year ahead. Electronics company Jabil surged 9.6% after exceeding profit and revenue expectations for the quarter, providing a positive boost to the market.

The Nifty witnessed selling pressure during the day, closing below the 24,200 mark. Technical analysts suggest that if the Nifty stays below this level, further weakness could follow, potentially leading to a correction toward 23,850. On the upside, 24,400 is likely to act as resistance.

HDFC Bank, Reliance Industries, and ICICI Bank were among the most active stocks in terms of turnover, with higher trading volumes indicating a strong presence in the market. Meanwhile, stocks such as Craftsman Automation, KFIN Technologies, and Mankind Pharma saw notable buying interest.

In total, 246 stocks hit their 52-week highs, while 38 stocks reached their 52-week lows. Among those seeing significant selling pressure were Deepak Fertilisers, Piramal Enterprises, and PVR INOX.

Overall, market sentiment was bearish, with a majority of stocks closing in the red, highlighting the cautious atmosphere as investors await key decisions from the U.S. Federal Reserve.