Benchmark indices Sensex and Nifty extended morning losses on December 18 and were trading 0.72 percent lower by midday on December 18, as financials, power, and auto sectors dragged the benchmarks amid caution ahead of the US Federal Reserve's highly anticipated policy decision due later in the day. Adding to the subdued sentiment were persistent FII selling over the last two sessions and a depreciating rupee inching toward record lows.
Eleven out of 13 sectors were trading in red.
At 12:45 pm on December 18, the Sensex was down 582.56 points or 0.72 percent at 80,101.89, and the Nifty was down 166.60 points or 0.68 percent at 24,169.40. About 1,165 shares advanced, 2,268 shares declined, and 86 shares unchanged.
"The near-term market construct has turned weak with FIIs turning sellers on rallies," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. "The trend of FII buying in early December has proved to be, as feared, a flash in the pan," he said.
Foreign institutional investors have offloaded Rs 6,410 crore in the cash market over the last two sessions, which Vijayakumar believes signals continued selling pressure during market rebounds. He attributed this trend to the stark divergence in performance between U.S. and Indian equities. While the S&P 500 has surged over 27 percent year-to-date, the Nifty has risen just 11.5 percent.
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Vijayakumar said that this disparity in relative performance is likely to persist until India witnesses a revival in GDP growth and corporate earnings, potentially in Q3 or signs of it emerging soon.
The rupee's depreciation also weighed on market sentiment. The rupee slipped to 84.92 against the US dollar, nearing its all-time low, as US tariffs and trade restrictions drove global investors away from emerging market currencies.
"A dovish tone could push the dollar index lower, providing relief for the rupee," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities. "However, any uncertain or hawkish remarks may strengthen the dollar and keep participants bearish on the rupee."
On the sectoral front, financial services bore the brunt of the selling pressure, with HDFC Bank and ICICI Bank dropping 1 percent and 1.5 percent, respectively. The Nifty Bank, Nifty PSU Bank, and Nifty Private Bank indices all were down over 1 percent.
Shares of JSW Steel, NMDC, and Hindalco tumbled 2–6 percent, weighing heavily on the Nifty Metal index, which ended 1.2 percent lower.
In contrast, sectors like healthcare, FMCG, and IT managed to stay resilient, posting modest gains amid the broader market decline.
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When it comes to individual stocks, Shares of Akzo Nobel India surged 7 percent amid reports of a potential $2–2.5 billion deal for its Dulux Paints business. Meanwhile, shares of Enviro Infra Engineers plunged 10 percent ahead of its second-quarter earnings announcement later today, following a sharp 26 percent rally over the past five sessions.
The broader indices mirrored the benchmark trend, with both the BSE Midcap and BSE Smallcap indices slipping 0.6 percent each.
On the technical front, Axis Securities noted that with Nifty breaching the 24,421 level, the index could witness further profit booking, potentially dropping to 24,218, 24,101, and 23,898.
Among Nifty 50 stocks, Bharat Electronics, Tata Motors, JSW Steel, Power Grid, and Coal India were the top laggards, declining 1.7–2.4 percent. In contrast, Dr Reddy's, Cipla, Trent, Wipro, and Sun Pharma led the gainers, rising 1–2 percent.
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