Sensex plunges 550 pts, Nifty below 24,650 as bank, IT stocks weigh; India VIX soars 10%

The India VIX, commonly referred to as the volatility gauge, surged over 10 percent to reach 14.4.

Sensex and Nifty deepened their morning losses by noon on December 16, weighed down by selling in IT, financial services, and telecom. Meanwhile, the India VIX, commonly referred to as the volatility gauge, surged over 10 percent to reach 14.4.

Investors are firmly focused on the U.S. Federal Reserve's December 17-18 Federal Open Market Committee (FOMC) meeting to decide key interest rates.

At 12:45 PM, the Sensex was down 417 points or 0.5 percent at 81,715, and the Nifty was down 117 points or 0.5 percent at 24,650. About 2,013 shares advanced, 1,556 shares declined, and 105 shares remained unchanged.

"While FIIs turning buyers in December, so far, after the relentless selling in the previous two months is positive, investors should not assume that the FIIs will continue to buy. Strong dollar and high bond yields in the US are headwinds for capital flows," aid V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

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In the previous session, Sensex and Nifty broke out of a five-day consolidation phase to close 1 percent higher, fueled by optimism around economic recovery, increased government capex in the second half of FY25, and a 50-basis point CRR cut by the RBI. Additionally, a moderation in India's November CPI to 5.48 percent hinted at the possibility of a repo rate cut in 2025, bolstering investor sentiment.

However, Vijayakumar highlighted concerns over slowing GDP growth and stagnant corporate earnings. He noted that sustained rallies would require stronger growth and earnings data, which could take time to materialise.

HDFC Bank—the heaviest Nifty 50 component—fell 0.6 percent, dragging the Nifty Bank index down by 0.3 percent.

The Nifty IT index snapped its five-day winning streak, shedding 0.6 percent, due to losses in Tata Consultancy Services, Tech Mahindra, and Infosys. Citi maintained a 'Sell' rating on TCS, citing tapering BSNL projects, scrutiny on smaller discretionary deals, and softer demand from the UK and Europe. The brokerage also reiterated 'Sell' ratings for Tech Mahindra and LTIMindtree.

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The Nifty Metal index dropped over 1 percent, pressured by weak global prices and concerns over U.S.-China trade dynamics. Weaker-than-expected retail sales data from China, a key consumer of metals, compounded fears of slowing demand. Vedanta, JSW Steel, and Tata Steel led the decline, falling 1-2 percent each.

Among individual stocks, shares of GE Power surged 4 percent after the company received an extension of a Rs 18.27 crore purchase order, awarded by the MP Power Generating Co. Shares of Droneacharya Aerial Innovations hit a 5 percent upper circuit after expanding into the Middle East with the incorporation of a new company in Abu Dhabi.

Meanwhile, the broader market outperformed the benchmarks, with the BSE Midcap and Smallcap indices rising 0.3 percent each.

"The trend-deciding level for the day is 24,580," Axis Securities said in a note. The brokerage said that if the Nifty trades above 24,580, it could see a further rally to 24,980-25,592 levels. However, if it trades below 24,580, the market may experience some profit booking, potentially correcting to 24,369-23,757 levels.

On Nifty 50, Titan, BPCL, Tech Mahindra, JSW Steel, and Adani Ports were the biggest losers, dropping 1-2 percent, while IndusInd Bank, Dr Reddy's, HDFC Life, and Bajaj Finance were the top gainers, rising 0.2-0.9 percent.

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