Closing Bell: Market Ends With Deep Cuts Ahead Of Fed Policy; Sensex & Nifty Tank Over 1% Each; WHY?

The Indian stock market tumbled to a two-week low on Tuesday, December 17, as the Sensex nosedived 1,064 points to close at 80,684, while the Nifty50 plummeted 332 points to settle at 24,336. A broad-based sell-off hit investor sentiment, with 49 out of 50 Nifty stocks ending in the red amid cautiousness ahead of the US Federal Reserve's meeting and a worsening trade deficit.

The carnage in the frontline indices was mirrored in other market segments. The Nifty Midcap index slipped 396 points to 59,047, while the Nifty Bank index plunged 747 points to end at 52,835.

Though broader markets fared slightly better, they still faced pressure. The Nifty Midcap and Smallcap indices declined 0.6% and 0.7%, respectively, reflecting a negative market breadth. The advance-to-decline ratio remained firmly skewed toward losses at 1:2.

Reasons Behind Market Crash

The sell-off across sectors and indices was triggered by multiple headwinds, both domestic and global. Here are the top five reasons for today's market rout:

Jitters Ahead of the US Fed Meeting

Investors remained on the sidelines ahead of the US Federal Reserve's policy outcome on Wednesday, December 18. While the market widely expects a quarter-point rate cut, the lack of clarity over the Fed's rate-cut trajectory for 2025 kept sentiments shaky.

India's Rising Trade Deficit

A sharp surge in India's trade deficit to $37.8 billion in November added pressure to the rupee, increasing concerns of it sliding toward 85 per dollar. This triggered foreign investor caution and amplified selling pressure in key sectors.

Weak Global Cues

Asian markets remained weak, with Japan's Nikkei falling 0.15% and the broader MSCI Asia-Pacific index (outside Japan) dropping 0.3%. Futures pointed to a soft opening in European markets, further exacerbating the bearish sentiment in Indian equities.

Index Heavyweights Drag

Major stocks like Reliance Industries, Bharti Airtel, HDFC Bank, TCS, and L&T emerged as the biggest drags on the Sensex and Nifty50. The weightage of these companies amplified the overall decline in the benchmarks.

Sectoral Weakness

Selling pressure was witnessed across major sectors, with PSU Banks losing the most, down 1.8%. Other laggards included Nifty Oil and Gas, Auto, Metal, and Financial Services, all shedding over 1.5% each.

The Nifty Bank index slumped 1.4%, while FMCG, IT, and Pharma indices fell 0.4%, 0.5%, and 0.8%, respectively. The only green spot was Nifty Media, which ended flat but resilient amid the sell-off.

Amid a sea of red, only a handful of stocks managed to stay afloat. Cipla, the pharma giant closed with minor gains after Kotak Securities upgraded the stock to 'Buy'. ITC managed to inch higher, emerging as one of the only Sensex gainers for the session.

On the flip side, heavyweights and other key stocks faced sharp declines. Shriram Finance, Grasim, Hero MotoCorp, Bharti Airtel, and JSW Steel were among the top Nifty losers. Stocks like HDFC Bank, Reliance Industries, and TCS dragged the Sensex lower.

Despite the weakness, some stocks bucked the trend on the back of specific triggers. Suzlon Energy gained 5% in a weak market due to strong investor interest. Quess Corp jumped 8% after receiving a positive brokerage note. Piramal Pharma rose 4% following a 'Buy' rating from JM Financial. Best Agro climbed 2% after securing a patent for a pesticidal composition.

However, other stocks like HCC slipped 4% after the company launched a Rs 1,000 crore QIP at a 5% discount to its floor price.

The sharp sell-off in Indian markets reflects increasing global uncertainty and domestic pressures. With the Fed policy outcome looming, investors are likely to remain cautious in the near term. Concerns surrounding the rising trade deficit and its impact on the rupee further weigh on market sentiment.

The broader outlook remains mixed as global cues, including US monetary policy and economic data, will play a crucial role in shaping short-term market movements. While midcap and smallcap indices showed relative resilience, sectoral performance remains under pressure, especially in PSU Banks, Oil & Gas, and Auto stocks.