The Sensex and Nifty opened lower on December 17, weighed down by financials and oil & gas stocks, as investors remained cautious ahead of the U.S. Federal Reserve's crucial December 17-18 meeting. With traders awaiting cues on the Fed's rate cut roadmap, uncertainty has cast a shadow, prompting investors to focus on selective opportunities.
At 10:30 AM, the Sensex was down 830 points or 1 percent at 80,918, and the Nifty was down 254 points at 24,414. About 1,502 shares advanced, 1,822 shares declined, and 93 shares remaines unchanged. Heavyweights HDFC Bank, RIL, and ICICI Bank collectively contributed over 80 points to Nifty's decline.
The India VIX, or volatility index, climbed nearly 6 percent to 14.8, signalling rising market uncertainty.
"The market is going to be lacklustre as most of the fund players are on leave on account of the Holiday season and I think it will remain this way till the end of December," said Vinit Bolinjkar, Head of Research at Ventura Securities. "One positive is that India's inflation is declining. In the last RBI policy, we saw a CRR cut, and if we get one more month of good data, the probability of a rate cut by the RBI also increases.
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Investors are now firmly focused on the Fed's December 18 decision, where a 25-basis-point rate cut is almost certain, with odds at 97 percent, as per the CME FedWatch tool. Analysts suggest the Indian markets may consolidate until this key clarity emerges, with the Q3 FY25 earnings season and Union Budget lined up as the next big triggers.
Bolinjkar is bullish on public sector banks and housing finance companies. "If rate cuts come, the long-term cost of funds will come down. Additionally, deposit pressure is easing. A global slowdown would also mean India can access international funds more cheaply and competitively."
The financial services sector faced pressure as HDFC Bank, ICICI Bank, and Shriram Finance dropped 0.5-2.5 percent, while declines in RIL, ONGC, and BPCL—down 0.5-1 percent—pulled the Nifty Oil & Gas index lower by 0.4 percent.
HDFC Bank shares dropped 0.8 percent after receiving a warning letter from India's market regulator, SEBI, alleging that its disclosures related to the resignation of a senior employee were non-compliant with certain regulations.
Nifty Media defied the broader market downtrend, rising over 1 percent, driven by strong gains in PVR Inox, Zee Entertainment, and Nazara Technologies, which climbed 1-4 percent.
Among other individual stocks, Piramal Pharma surged nearly 3 percent after JM Financial initiated coverage with a 'Buy' recommendation.
On the technical front, the Nifty faces a tough resistance wall at 24,800, followed by a more formidable hurdle at 25,000, said Hardik Matalia, Derivative Analyst at Choice Broking. He said that a decisive breakout above these levels could pave the way for further upside. On the downside, immediate support is positioned at 24,550, with the next critical level at 24,400.
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The domestically focused BSE Midcap and BSE Smallcap indices were up marginally by 0.1 percent.
"Traders are advised to adopt a buy-on-dips strategy as long as the index holds above these support levels. To manage risk effectively, it is recommended to maintain a strict stop-loss at 24,200 on a closing basis," Matalia added.
The previous session saw Nifty and Sensex decline nearly half a percent, weighed down by IT and metal stocks. Both FIIs and DIIs remained net sellers, offloading shares worth Rs 278.7 crore and Rs 234.25 crore, respectively.
On the Nifty 50, Shriram Finance, Bajaj Finserv, Grasim, RIL, and Bharti Airtel were the top losers, falling 1-3 percent, while Cipla, Tata Motors, Bharat Electronics, Tech Mahindra, and Adani Ports led the gainers, rising 0.3-2 percent.
Overseas, the Nasdaq hit a record high on December 16, while the S&P 500 also rose as investors await the Fed’s final policy announcement for the year. Asia-Pacific markets traded mixed, mirroring Wall Street’s sentiment. Focus now shifts to the Bank of Japan's policy review on December 19 and the People’s Bank of China’s loan prime rate announcement on December 20.
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