Indian benchmarks, Sensex and Nifty, opened flat on December 9 but declined soon after as FMCG stocks took a hit after Godrej Consumer shares plunged 9 following a weak quarterly sales forecast by the company. IT and metal stocks also declined, slipping 0.2 percent and 0.4 percent, respectively.
At 10.00 AM, the Sensex was down 207 points or 0.3 percent at 81,501, and the Nifty was down 66 points or 0.3 percent at 24,611.40. About 2,103 shares advanced, 1,212 shares declined, and 141 shares remained unchanged.
"Entering the current week, markets are likely to see a positive momentum, supported by the CRR cut, despite minor volatility from upcoming events like US CPI data and the Fed rate decision," said Aishvarya Dadheech, Founder and CIO of Fident Asset Management.
Both Sensex and Nifty gained over 2 percent last week, their best performance since early June, following the Reserve Bank of India (RBI)'s decision to cut the CRR that banks must hold to 4 percent from 4.5 percent. This move is expected to enhance liquidity in the financial system, support credit growth, and aid economic recovery. Meanwhile, the repo rate was maintained at 6.5 percent for the eleventh time.
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Focus now shifts to US consumer price inflation (CPI) data, due on December 11, which will influence the future rate trajectory and foreign inflows into emerging markets such as India. India's CPI data, due on December 12, will be a crucial factor influencing the RBI's rate cut timing.
The Nifty FMCG index fell over 2 percent, dragged down by Godrej Consumer Products, whose shares dropped over 9 percent due to the company's weak growth outlook for the October-December quarter. The company anticipates sales growth in the mid-single digits for Q3 while stating that demand conditions in the economy have been "subdued" for the past few months.
Nestle, Britannia, Tata Consumer, and HUL—key FMCG players on the Nifty 50—were the biggest losers, falling 2-4 percent each.
Meanwhile, financial and construction stocks gained, with Kotak Mahindra, HDFC Life, SBI Life, and L&T emerging as Nifty 50's top performers, rising 1-2 percent.
The broader markets outperformed the benchmarks, with the BSE Midcap and Smallcap indices rising 0.1 percent each.
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Market participants are of the view that mall and mid-caps, which have outperformed over the past few weeks, are expected to maintain their momentum. "Even during the Nifty's 10 percent decline earlier, midcaps and small caps showed resilience, falling only 6-9 percent, indicating inherent strength in the market that retail investors supported," Dadheech said. In case of a recovery this week or next, he believes the recovery will likely be more pronounced in these segments.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, said he expects the Nifty 50 to maintain its gradual upmove this week, driven by a potential increase in liquidity post the RBI's CRR cut, positive news flows around government policies, and a return of FII inflows.
FIIs have been net buyers so far in December, purchasing nearly Rs 12,000 crore worth of Indian equities, providing a significant boost to market sentiment.
According to Lovelesh Sharma, a Consultant at SAS Online, the Nifty 50 is expected to trade within the range of 24,500-25,000, with 25,000 witnessing high open interest concentration. A close above it could open levels of 25,300. "On the downside, bulls need to defend 24,500. A slip below that will push the Nifty back into the range of 24,000–24,450," he added.
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