Market Reverses Opening Gains, Sensex & Nifty Slip Deep In Red Amid Volatility Ahead Of US Fed Outcome

Indian equity benchmarks Sensex and Nifty faced selling pressure by midday on December 16, as losses in IT, financial services, and telecom sectors dragged the indices lower. By 12:50 pm, the Sensex was down 417 points (0.5%) at 81,715, while the Nifty declined 117 points (0.5%) to 24,650. Market breadth, however, remained positive with 2,013 stocks advancing, 1,556 declining, and 105 remaining unchanged. The India VIX, a key measure of market volatility, surged over 10% to hit 14.4.

US Federal Reserve Meeting

The market's attention remains firmly on the US Federal Reserve's Federal Open Market Committee (FOMC) meeting scheduled for December 17-18, where key interest rate decisions will be made. Investors are treading carefully as global cues and domestic economic data loom large on sentiment.

Weekly Market Recap

Despite Friday's decline, Indian indices logged gains for the fourth consecutive week, supported by strength in banking and IT heavyweights. The Nifty ended the week 0.37% higher at 24,768, rebounding sharply from intraday lows of 24,200. Similarly, the BSE Sensex gained 424 points (0.52%) to close at 82,133. Value buying in beaten-down stocks and easing inflation provided a much-needed lift, though apprehensions about the Fed's policy stance and upcoming domestic macroeconomic data tempered optimism.

According to Puneet Singhania, Director at Master Trust Group, "The Nifty 50 broke past its horizontal resistance of 24,700, closing above it for the first time. Support levels are strong at 24,100 and 24,300, making dips to these levels attractive for buyers with a stop loss at 24,100. On the upside, the psychological 25,000 mark could be the next target. However, a breach below 24,100 could see the index sliding further to 23,900."

The broader market saw mixed performance. The BSE Midcap and Smallcap indices outperformed the benchmarks, gaining 0.3% each.

Sectoral Trends

The Nifty IT index snapped its five-day winning streak, shedding 0.6%. Heavyweights like Tata Consultancy Services (TCS), Tech Mahindra, and Infosys led the decline. Citi retained its 'Sell' rating on TCS, citing concerns over slowing discretionary spending, scrutiny of BSNL projects, and subdued demand in Europe and the UK. The brokerage also maintained 'Sell' ratings on Tech Mahindra and LTIMindtree.

The Nifty Metal index fell over 1% due to weak global prices and US-China trade tensions. Weaker-than-expected retail sales data from China, a major consumer of metals, further dampened sentiment. Vedanta, JSW Steel, and Tata Steel were among the biggest laggards, slipping 1-2% each.

Meanwhile, the Nifty Bank index declined 0.3%, weighed down by a 0.6% fall in HDFC Bank, the largest component of the Nifty 50.

Stock-Specific Action

In individual stock performance, GE Power rallied 4% after securing an extension of a Rs 18.27 crore purchase order from MP Power Generating Co. Shares of Droneacharya Aerial Innovations hit the 5% upper circuit after announcing its expansion into the Middle East with the establishment of a new entity in Abu Dhabi.

On the Nifty 50, Titan, BPCL, Tech Mahindra, JSW Steel, and Adani Ports were the biggest losers, dropping 1-2% each. Conversely, IndusInd Bank, Dr Reddy's, HDFC Life, and Bajaj Finance were the top gainers, rising between 0.2% and 0.9%.

Global and Domestic Triggers

Crude oil prices surged over 4.5% to close the week near $74.20 per barrel, while US 10-year bond yields climbed 5.5% to trade at approximately 4.38%. Foreign Institutional Investors (FIIs) remained net sellers, offloading Rs 226 crore in the cash market, while Domestic Institutional Investors (DIIs) supported the market with net inflows of Rs 2,880 crore.

On the global front, China reported a dip in its consumer inflation rate to a five-month low of 0.2% in November, down from 0.3% in October. Back home, India's November CPI eased to 5.48%, raising hopes for a potential repo rate cut in 2025.

The near-term trajectory of Indian equities will likely depend on the outcome of the Fed meeting and domestic macroeconomic indicators. Analysts see opportunities for buying on dips, with clear risk levels to manage trades effectively.