The Sensex and Nifty ended lower in a lacklustre trading session on December 16, weighed down by IT and metal stocks ahead of the U.S. Federal Reserve's December 17-18 Federal Open Market Committee (FOMC) meeting. Analysts expect the Indian benchmarks to consolidate until clarity emerges from the Fed's stance on key interest rates. As the second half of December unfolds, analysts anticipate a tapering of FII volumes as well, while stock-specific action continues to dominate the domestic market landscape.
The India VIX, a measure of market volatility, spiked over 10 percent intraday but later moderated, currently up 7 percent at 14.
At close, the Sensex was down 384 points or 0.5 percent at 81,748, and the Nifty was down 100 points or 0.4 percent at 24,668. About 2,221 shares advanced, 1,749 shares declined, and 94 shares remained unchanged.
"There is a lack of triggers, which is impacting the markets at the moment. Global cues are also largely flattish, with the FOMC policy meeting scheduled for this week," said Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services.
Looking ahead, Q3 FY25 earnings season in January and the Union Budget in February will serve as key triggers for the Indian market. For now, markets are focused on the Fed's decisions.
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According to Khemka, two factors will be critical: a potential rate cut and the Fed's guidance on future policy.
"Some segments of the market expect the Fed to pause after almost a 1 percent rate cut before resuming the cycle later. We will get more clarity on this after the Fed meeting, which will drive the market’s direction," he said adding that until then, he expects Indian benchmarks to remain in a consolidation mode.
Khemka stated that if the Fed's commentary signals a pause or further rate cuts, it would be highly positive for the market. Conversely, a more hawkish stance or any adverse developments could trigger a market cooldown, with profit booking, particularly in the U.S. markets.
The Nifty IT index snapped its five-day winning streak, declining 0.7 percent as TCS, Infosys, and Tech Mahindra slipped 1-1.5 percent. Brokerage firm Citi maintained a 'Sell' rating on TCS, citing tapering BSNL projects, Return on Investment (RoI) scrutiny on smaller deals, and softer demand from the UK and Europe. The brokerage also had a 'Sell' on Tech Mahindra and LTIMindtree.
The Nifty Metal index fell nearly 1 percent, tracking weak global prices after November's retail sales in China came in weaker than expected. This has heightened pressure on Beijing to increase stimulus as it braces for potential trade tariffs under a second Trump administration. Hindalco, JSW Steel, and Vedanta were the major drags on the index, each falling over 1 percent.
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Meanwhile, shares of real estate companies were buzzing in trade with the Nifty Realty index rising 3 percent as investors bet on hopes of strong housing demand in 2025, driven by new launches, imminent rate cuts, and favourable demographic trends. Players like Oberoi Realty, Prestige Estates, and Macrotech Developers led gains within the sector and surged 3-6 percent.
The BSE Smallcap and BSE Midcap also outperformed the benchmark indices, gaining 0.7 percent and 0.5 percent each.
From a technical perspective, Rajesh Bhosale, a Technical Analyst at Angel Broking said that the bias remains positive, but the market is in consolidation mode. "Over the past few weeks, the market has consistently faced resistance in the 24,700-24,800 range. Even today, as prices tested these levels, we witnessed profit booking. Once we decisively move beyond the 24,700-24,800 range, dips can be viewed as buying opportunities."
Titan, TCS, Adani Ports, Hindalco, and BPCL were the biggest losers on the Nifty 50 index, falling 1-2 percent. Meanwhile, Dr Reddy's, IndusInd Bank, Bajaj Finance, HDFC Life, and Power Grid were the top gainers, rising 0.3-2 percent.
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