Sensex and Nifty staged a sharp recovery on December 13 afternoon, led by gains in telecom, IT, and FMCG stocks. This rebound followed a significant drop earlier in the session, driven by weakness in other Asian markets, with concerns over a stronger dollar, rising U.S. Treasury yields, and a sluggish Chinese economy dampening sentiment.
At 2:15 pm, Sensex was up 681.46 points or 0.84 percent at 81,971.42, and the Nifty was up 194.15 points or 0.79 percent at 24,742.85. About 1,399 shares advanced, 2,031 shares declined, and 83 shares unchanged.
Information technology stocks rose on a near-certain US rate cut while Bharti Airtel extended its rally after Jefferies added the telecom operator to its top Asia picks for 2025.
The broader, more domestically focussed smallcaps and midcaps were still down about 0.5 percent each.
Analysts and fund managers remain optimistic about the Indian markets, despite a 6 percent correction from recent highs, and anticipate a period of consolidation in the near to medium term.
"The correction has been viewed as a buying opportunity. For December and January, the Nifty is projected to inch toward 25,500–26,000 levels. A pre-budget rally is likely to drive stock-specific moves in early January," said Kunal Rambhia, Fund Manager and Trading Strategist at The Streets.
"A sideways movement with a positive bias is expected over the next 15 days, followed by a pre-budget rally leading to a possible new market high," Rambhia told Moneycontrol.
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Gaurang Shah, Senior Vice President at Geojit Financial Services expects the market to remain in a consolidation phase through the remainder of the year.
At the opening bell, markets experienced a sharp sell-off, with all sectoral indices deep in the red, weighed down by a confluence of factors.
US treasury yields, which have seen their biggest weekly increase this year, are dampening hopes for deep U.S. rate cuts in 2025. Additionally, a high-level meeting in Beijing, which pledged to boost debt and consumption, failed to lift Chinese stocks, as renewed U.S. trade tensions grow with the potential return of Donald Trump to power.
Concerns about FII selling have resurfaced, with foreign institutional investors offloading Indian equities worth Rs 4,572 crore on December 11 and 12.
The much-awaited India Consumer Price Index (CPI)-based inflation eased to 5.48 percent in November, compared to 6.21 percent in October, according to data released by the Ministry of Statistics and Programme Implementation on December 12.
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Narendra Solanki, Head of Fundamental Research-Investment Services at Anand Rathi Share and Stock Brokers said that although inflation has slowed, it remains above the RBI's 5 percent target. "This may have led to expectations of shallow rate cuts, although one more month of data is still needed for the RBI to make a decision."
In terms of sectoral performance, most indices were in the red, though IT, FMCG, and Infra managed gain 0.3 percent.
The Nifty Metal index dropped 1.6 percent, weighed down by a stronger U.S. dollar and lingering uncertainty over China's stimulus plans. Tata Steel, JSW Steel, and Hindalco saw their shares decline 2-3 percent.
Financial services emerged as the biggest laggards on the Nifty, with HDFC Bank, Axis Bank, and Shriram Finance pulling the index lower.
Broader markets also struggled, with the BSE Midcap and BSE Smallcap indices sliding 0.8 percent, underperforming their benchmark counterparts.
Bharti Airtel, HCLTech, UltraTech Cement, HUL, and Adani Enterprises led the Nifty 50 gainers, rising 1-4 percent. On the flip side, Shriram Finance, Tata Steel, JSW Steel, IndusInd Bank, and Hindalco were the biggest losers, falling 1-3 percent.
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