Sensex settles 300 pts lower from day's high, Nifty ends below 25,850: Mixed US jobs data among key factors behind market decline

Sensex falls 300 pts from day's high, Nifty below 25,850: Mixed US jobs data among key factors behind market decline

Indian equity benchmarks Sensex and Nifty fell significantly from day's high on December 17 amid volatility and ended in red for third straight day.

At 3:40 pm, the Sensex was down 120.21 points or 0.14% at 84,559.65, and the Nifty was down 41.55 points or 0.16% at 25,818.55. About 1,436 shares advanced, 2,555 shares declined, and 153 shares were unchanged. Sensex fell over 300 points from day's high. Sensex's day high was 84,889 while that of Nifty was 25,929.

Eleven of the 16 major sectors fell on the day. Mid- and small-cap indices were hit harder than their benchmark peers by falling 0.5% and 0.7%, respectively. Nearly 33% of the total 3,224 stocks advanced on the National Stock Exchange, while almost 65% declined and the rest were unchanged.

The Nifty PSU Bank index rose 1.3% and the Nifty Metal index was up 0.25%, while the Nifty Consumer Durables and the Nifty Media index dropped 1% and 1.7%, respectively.

Shriram Finance, State Bank of India, Eicher Motors, Hindalco Industries, Tata Consumer were among top gainers on the Nifty, while losers included Max Healthcare, SBI Life Insurance, HDFC Life, Trent, Apollo Hospitals.

Most defence stocks were down and the Nifty India Defence index fell for the third consecutive session. Shares of MTAR Technologies, Paras Defence and Space Technologies, and Data Patterns (India) fell 2–3%. Akzo Nobel India, Indian Overseas Bank, HBL Engineering were the biggest decliners among Nifty 500 constituents and were down 4–12%.

Here are various factors behind market decline:

1. Uncertain Fed outlook

Mixed signals from US jobs data kept the Federal Reserve's rate trajectory outlook uncertain following which Wall Street ended on a mixed note and Asian markets were also muted as mixed US jobs data reading left investors awaiting further cues.

The S&P 500 slipped 0.24%, marking its third straight decline, as investors assessed the delayed release of the November jobs report. The Nasdaq Composite gained 0.23%, while the Dow Jones Industrial Average fell 0.62%.

US jobs growth rebounded more than expected in November, but the unemployment rate rose to a four-year high of 4.6%. Investors are now waiting for the U.S. consumer price inflation data for November due on Thursday.

Fed funds futures suggest markets are still pricing in roughly two U.S. rate cuts next year, with the latest labour market reading doing little to shift expectations.

"For now, our base case remains two 25-bps rate cuts in the first half of next year at the March and June FOMC meetings, with the risks skewed toward more rather than fewer cuts in 2026," economists at Wells Fargo said in a note.

2. Persistent FII selling

On the institutional front, foreign institutional investors (FIIs) were net sellers of equities worth Rs 2,060.76 crore, while domestic institutional investors (DIIs) bought shares worth Rs 770.76 crore on Tuesday, December 16.

Foreign investors have sold Indian equities for eight consecutive sessions till Tuesday.

"Persistent FPI selling and weakness in the rupee remain key near-term headwinds, compounded by delays in the conclusion of India-US trade negotiations," said Ponmudi R, chief executive officer at Enrich Money.

"With the ongoing weakening of the AI trade, FIIs are likely to turn buyers in India sometime in 2026. If, along with this, a US-India trade deal happens, FIIs will turn buyers in India. There is a likelihood of rupee strengthening in H1 2026. Therefore, while FII selling is depressing stock prices now, investors should buy in anticipation of a 2026 rally," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

3. Selling in banking heavyweights

A 1.5% rise in shares of State Bank of India lent support to the Nifty 50, while index heavyweights such as ICICI Bank and HDFC Bank fell 1.5% and 0.6%, respectively, dragging down the index. Shares of Axis Bank were up over 1% after a sharp decline in the previous session.

The two stocks have a cumulative weightage of over 20% on the index. Bharti Airtel, which has a near 5% weightage, fell marginally after rising earlier.

4. Oil prices jump

Oil prices climbed after US President Donald Trump ordered "a total and complete" blockade of all sanctioned oil tankers entering and leaving Venezuela, raising fresh geopolitical tensions at a time of concerns over demand.

US crude futures advanced 1.3% to $55.97 per barrel, while Brent crude futures rose 1.15% to $59.60 a barrel, cutting into steep losses from Tuesday. Oil prices slid as the prospect of a Russia-Ukraine peace deal appeared to strengthen, raising expectations sanctions could be eased.

The move is a major escalation and follows the seizure of an oil tanker last week by US forces off Venezuela. The regime of President Nicolas Maduro said the latest action was intended to steal the country’s resources.

Venezuela’s oil production has increased since hitting a low in 2020, but is far from where it was decades ago. Tankers loaded almost 590,000 barrels a day for export last month, compared with global consumption of more than 100 million barrels a day. Most of the country’s crude goes to China.

The OPEC producer’s flagship Merey crude is often used to make bitumen to pave roads in China. Bitumen futures in Shanghai surged as much as 2.8% on Wednesday, the biggest increase since late October, reported Bloomberg.

Technical View

"For the Nifty 50, the index continues to trade under pressure after failing to reclaim higher levels in recent sessions. The near-term trend remains sideways to negative as the index is trading below key short-term moving averages. Immediate support is placed around 25,700, and a breakdown below this level could lead to further consolidation toward 25,600–25,550. On the upside, resistance is seen at 26,000–26,050, which remains a crucial hurdle. A sustained close above this zone is required to stabilise sentiment and revive short-term bullish momentum. Until then, the index is likely to remain range-bound with a cautious bias," said Aakash Shah, Technical Research Analyst at Choice Equity Broking Private Limited.