Closing Bell: Market Ends Deep In Red; Sensex & Nifty Decline 5% Each This Week, TCS RIL Major Drag

Indian stock markets ended the week on a sour note as the Sensex nosedived by 964 points, closing at 79,218, and the Nifty shed 247 points to settle at 23,952. The broader market also faced headwinds, with the Midcap Index losing 167 points to finish at 58,556, and the Nifty Bank index plunging by 564 points to close at 51,576. This marks the fifth consecutive day of losses for the benchmark indices.

Weekly Carnage

The Sensex has dropped over 4,000 points this week, a decline of 5%, while the Nifty breached its critical 200-day exponential moving average (DEMA) of around 23,700. Index heavyweights such as TCS, Reliance Industries, Infosys, Axis Bank, and HDFC Bank recorded declines ranging between 1-3%, pulling down market benchmarks further.

Key Drivers of Downtrend

Several factors contributed to the steep sell-off, including global cues, macroeconomic concerns, and sector-specific challenges:

Hawkish US Federal Reserve Outlook

The Federal Reserve's revised rate cut projections were a major dampener. Contrary to market expectations of three to four rate cuts in 2025, the Fed indicated only two quarter-point cuts by the end of the year. This cautious stance sent shockwaves through global markets, with major US indices like the Dow Jones and Nasdaq 100 dropping by 4% and 2.5%, respectively.

"Markets have been rattled by the Fed's hawkish tone, which has led to a global sell-off. In India, the Nifty 50 declined 2.4% this week, while the broader indices showed relative resilience, with the CNX Midcap falling 4.6% and the CNX Smallcap slipping 2.7%. However, selective investor confidence in broader market opportunities persists," said Krishna Appala, Senior Research Analyst at Capitalmind Research.

Foreign Institutional Investor (FII) Outflows

FIIs have pulled out over Rs 12,000 crore from Indian equities in the last four sessions, driven by a stronger US Dollar, rising bond yields, and the Fed's policy outlook. The sustained outflow has added pressure on Indian markets.

Macroeconomic Weakness

The rupee's slide to an all-time low against the dollar and a record trade deficit in November are heightening investor anxiety. India's economic growth is also showing signs of strain, with Q2 GDP growth hitting its lowest in nearly two years.

"Domestic and global uncertainties, coupled with a muted outlook for Q3 earnings, are keeping investors on edge. Additionally, key events such as the Indian Union Budget announcement and the transition in the US presidential administration are prompting a wait-and-watch approach," added Appala.

Key sectors such as banking, IT, and financials failed to meet market expectations, contributing to the bearish sentiment. Weak quarterly earnings and persistent inflation concerns have also dampened hopes for a quick recovery.

Despite the overall market gloom, select stocks and sectors provided some relief. Dr Reddy's Laboratories surged 4% after Nomura upgraded the stock to a "buy." Abbott gained nearly 4%, buoyed by a positive brokerage note from JPMorgan. Lupin advanced on securing USFDA approval for an HIV and Hepatitis B drug.

Pharma stocks were the stars of the day, with gains of up to 5%. Sugar stocks rallied following Transport Minister Nitin Gadkari's comments on supporting exports and raising the minimum support price (MSP).

SpiceJet rose 6% after settling a $16 million dispute with Genesis. Stove Kraft gained 4% after being chosen as a supply partner by IKEA. IOL Chemicals jumped 8% on plans to consider a stock split later this month.

The advance-decline ratio stood at a balanced 1:1, indicating mixed sentiment across sectors. While market breadth tilted slightly toward declines, selective buying in defensive sectors like pharma and consumer goods provided a cushion.