Black Friday: Stock Market Crash; Why Sensex Dropped By 1,200 Pts, Nifty Fell By 368 Pts On December 13?

Stock Market Crash: The Indian market faced intense selling pressure on Friday, December 13, 2024, with Sensex nosediving by more than 1,200 points and Nifty 50 shedding nearly 368 points. Global risks dampened investors' mode across markets including Wall Street and Asian cues, with Indian stocks following suit. The stronger dollar amidst hot inflation in the USA, coupled with concerns related to Trump's tariff impact in 2025 and uncertainty around China's stimulus plan added to woes. PSU bank and metal stocks emerged as top losers.

Sensex Crash:

At the time of writing, Sensex traded at 24,180.80, down by 980 points or 1.3%. A few minutes ago, the benchmark nosedived by 1,207.14 points or 1.48% to hit an intraday low of 80,082.82. In the previous session, Sensex was at 81,289.96.

The latest selloff is leading Sensex for a weekly drop of nearly 2%.

Nifty 50 Crash:

Currently, Nifty 50 traded at 24,252.55, which is a decline of 296.15 points or 1.21%. However, the index was in a free fall by 1.52% or 367.9 points to hit an intraday low of 24,180.80. The nifty index underperformed the Sensex.

Following this, Nifty is also headed for a weekly loss of 2%.

Gains And Losers On December 13:

All sectoral indices were in deep red. Nifty Midcap and Smallcap index slipped between 1% to 1.5%. While India's volatility index surged by 8%. Meanwhile, from banking to media stocks, sectors were down by 1% to 2.5%.

Nifty PSU Bank and Nifty Realty dropped by 2.23% each, while Nifty Metal index shed over 2.1%. Further, Bank Nifty was down by 1.3%, while Nifty Financial Services plunged by 1.53%. Nifty Oil & Gas, Pharma and Auto index tumbled by more than 1% each.

Among stocks, Shriram Finance, Tata Steel, JSW Steel, IndusInd Bank and Hindalco were top losers with a downside of 2% to 4%. Meanwhile, gains were seen in Bharti Airtel, Apollo Hospital, HDFC Life, Adani Enterprises, and HUL however upside was limited.

Why Stock Market Is Down On December 13?

As per Trading Economics data, market sentiment was dampened by domestic inflation data, which showed November inflation easing to 5.48%, still near the RBI's upper limit of 6%, erasing hopes of rate cuts in January meeting. The BSE Sensex mirrored a fall on Wall Street overnight, while traders remained cautious ahead of the Fed's meeting and a slew of economic data from China next week. Among the biggest laggards were Shriram Finance (-3.8%), Tata Steel (-3.2%), and JSW Steel (-3.1%). For the week, the index is on track for a 1.7% slump, marking its first weekly loss in four weeks, as traders brace for the Fed's interest rate decision.

Further, the data stated that the dollar index strengthened to 107 level against a basket of currencies, making its best week performance in a month. Trading Economics said, these gains come as markets have already priced in a 25-basis point rate cut from the Federal Reserve next week, though the outlook for 2025 remains uncertain. Data released on Thursday showed the headline producer price index rose more than expected, while the core index slowed in line with forecasts. Additionally, initial jobless claims unexpectedly rose to a nearly two-month high of 242K, well above the anticipated 220K. Markets are currently assigning a 96% probability that the Fed will implement a quarter-point rate cut at next week's meeting.

What To Expect?

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, In the near-term the market has a headwind and a tailwind. The headwind is the resumption of selling by the FIIs who sold stocks for Rs 3560 crores yesterday. Given the high valuations in India FIIs are likely to sell more at every market rise. Selling has been profitable for FIIs since the dollar has been appreciating after the US election. The tailwind which can support the market is the declining inflation.

Further, Vijayakumar said, November CPI inflation at 5.48% has come within the RBI's tolerance limit. If this trend continues it can pave the way for a rate cut by the MPC in February. However, the rising dollar is a concern since it can lead to imported inflation. Nifty is unlikely to break from the range of 24500 - 24850. Buying will emerge at the lower end of the band and selling will resume at the higher end of the band.