Closing Bell: Markets End In Red As Volatility Lingers, Sensex & Nifty Ends With Cuts Ahead Of CPI Data

Indian equity markets closed lower on Thursday, December 12, after a rangebound session dominated by volatility. Despite a positive handover from Wall Street, domestic benchmarks struggled amid investor caution ahead of India's retail inflation data, due later in the day.

The Sensex dropped 236 points, or 0.29%, to close at 81,290, while the Nifty declined 93 points, or 0.38%, to end at 24,549. The broader market witnessed sharper declines as the Midcap Index slipped 271 points to 59,022, and the Nifty Bank lost 175 points, settling at 53,216.

IT stocks emerged as the bright spot, continuing their rally for the fourth consecutive session. The Nifty IT index hit a fresh all-time high of 46,002 points intraday, before closing at a record 45,687, up 0.73%. Investors were buoyed by expectations of an interest rate cut by the Federal Reserve next week.

In contrast, heavyweight stocks such as Reliance Industries and private sector banks including HDFC Bank, ICICI Bank, and Kotak Mahindra Bank were top drags on the indices, erasing early gains and pushing benchmarks lower.

The rally in IT stocks was underpinned by strong global cues. In the US, inflation data for November aligned with market expectations, solidifying hopes for a 25-basis-point rate cut by the Federal Reserve on December 18. The CME FedWatch Tool reflected a 98.6% probability of a rate cut, up from 86% prior to the inflation report.

Market experts believe that while US consumer prices rose at the fastest pace in seven months, a cooling labour market and steady core inflation metrics provide the Fed with room to lower rates for the third time this year.

Several Adani Group companies recorded sharp intraday gains, with stocks rising between 1% and 6%. The FMCG sector struggled amid concerns about weak demand, weighing on broader market sentiment. NALCO stock declined 8% following a slump in global alumina prices.

Waaree Energies stock rose 4% on securing a 170 MW solar power project. Gopal Snacks slides 8% after reporting a fire incident at its Gujarat manufacturing unit. Nuvama and Neuland both stocks lost 5% each following block deals. Muthoot Finance hits record high.

Steel stocks slipped off highs on comments from the Steel Ministry regarding potential safeguard duties dampened investor enthusiasm. Vedanta gains 2% after announcing plans to consider its fourth interim dividend for FY25. CONCR declines 4% after facing selling pressure on Goldman Sachs's target price cut.

Market breadth leaned heavily towards declines, with the advance-decline ratio at 1:3, signalling widespread weakness. While pockets of strength were seen in IT and select financial stocks, profit-booking and cautious sentiment dominated the session.

Investors are now watching the release of India's retail inflation data, which could provide crucial cues for future monetary policy. Additionally, global market movements and Federal Reserve decisions will likely play a key role in shaping market trends in the coming sessions.