Stock Market Today: Sensex and Nifty 50 Fall Over 1% Amid Global Pressure

The Indian stock market faced a significant downturn on Friday, as widespread selling pressure dragged major indices lower. Both Sensex and Nifty 50 fell over 1 per cent, with midcap and smallcap stocks experiencing even sharper declines.

The Sensex dropped by more than 1,200 points, closing at 80,082.82, reflecting a 1.5 per cent decrease. Similarly, the Nifty 50 tumbled by nearly 370 points, settling at 24,180.80, marking a 1.5 per cent drop. Heavyweight stocks, including Reliance Industries, HDFC Bank, and SBI, registered losses exceeding 1 per cent each.

Midcap and smallcap indices on the BSE recorded declines of up to 2 per cent, amplifying the market’s bearish sentiment. The overall market capitalisation of BSE-listed companies fell from Rs 458 lakh crore to approximately Rs 451 lakh crore, erasing nearly Rs 7 lakh crore in investor wealth within a single trading session.

The rise in the US dollar and treasury yields created a challenging environment for emerging markets, including India. The strengthening dollar has diminished risk appetite among investors, while higher bond yields have intensified the outflow of foreign capital. Longer-term treasury yields in the US saw their steepest weekly increase this year, adding pressure on global equity markets.

Recent US inflation data has reignited concerns over persistent price pressures. The consumer price index (CPI) in the US recorded its fastest increase in seven months, rising to 2.7 per cent in November from 2.6 per cent in October. Producer prices also saw a notable uptick, with the producer price index (PPI) registering its largest gain since June at 0.4 per cent. These developments suggest inflation remains a key challenge for the Federal Reserve, potentially impacting its monetary policy decisions.

India’s retail inflation, meanwhile, eased to 5.48 per cent in November, down from October’s 14-month high of 6.21 per cent. Despite this improvement, concerns persist over global inflationary trends.

Investors remained cautious ahead of the upcoming Federal Open Market Committee (FOMC) meeting scheduled for December 17-18. Although markets anticipate a 25-basis-point rate cut, the primary focus will be on Federal Reserve Chair Jerome Powell’s guidance on inflation and economic growth. Expectations of a prolonged rate reduction cycle appear to be fading, with analysts closely monitoring any policy shifts influenced by geopolitical and economic developments.

Foreign investors have resumed selling Indian equities, withdrawing over Rs 4,500 crore in just two days. Rising US bond yields, dollar appreciation, and high valuations in Indian equities have contributed to this trend. Experts believe FIIs will likely continue selling at higher levels, given the current market dynamics.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “In the near term, foreign investors are capitalizing on the appreciating dollar and stretched valuations in the Indian market. This trend is expected to persist, particularly during market upswings.”

The Nifty 50 index broke its crucial 50-day exponential moving average (50-DEMA) support level at 24,300, signaling potential further downside. Anshul Jain, Head of Research at Lakshmishree Investment and Securities, remarked, “If the Nifty closes below 24,350, we could see additional selling pressure. Sectors such as metals, pharmaceuticals, FMCG, and PSUs may remain under stress.”

Experts predict the Nifty 50 will trade within the range of 24,500 to 24,850 in the near term, with buying emerging at lower levels and selling resuming near the upper band.

Friday’s sharp selloff in the Indian stock market was driven by a combination of global factors, inflationary concerns, and technical indicators. As markets prepare for the upcoming US Federal Reserve meeting, volatility is likely to persist. Investors are advised to remain cautious and closely monitor developments in global and domestic markets.