Market jitters: Sensex plunges over 1,100 points as ‘Fed Decision’ looms

A wave of uncertainty swept across the Indian stock market on December 17th, triggering a significant sell-off that sent the Sensex and Nifty tumbling. Investors, gripped by anxiety ahead of the US Federal Reserve's interest rate decision, retreated to the sidelines, leading to a broad-based decline. This market downturn was further fueled by a record low for the Indian rupee and a lack of fresh buying from foreign institutional investors (FIIs).

Market Mayhem: A day of declines

The BSE Sensex nosedived over 1,100 points, a drop of 1.2 percent, hitting an intraday low of 80,732.93. The NSE Nifty mirrored this decline, plunging below the crucial 24,400 mark with a loss of 284 points. This sell-off was widespread, impacting key sectors like finance, metal, FMCG, and IT. Heavyweight stocks such as Reliance Industries, Bharti Airtel, and HDFC Bank bore the brunt of the selling pressure, contributing significantly to the overall market decline.

Factors fueling the fall:

Several key factors contributed to this market downturn:

• US Fed Rate Decision: The looming US Federal Reserve meeting on Wednesday weighed heavily on investor sentiment. While a 25 basis points rate cut is largely anticipated, investors remain apprehensive about the Fed's forward guidance for the coming year. Any indication of a less dovish stance could further rattle the markets.

• Rupee's record low: The Indian rupee depreciated to a new all-time low of 84.92 against the US dollar, adding to the market's woes. This weakness was attributed to factors like foreign fund outflows, a record trade deficit for November, and increased gold imports.

• FII Selling: The absence of fresh buying from FIIs further dampened market sentiment. Their continued selling, particularly in midcap and smallcap stocks, suggests a cautious approach towards Indian equities.

Global Market Overview:

While Asian markets, including Seoul, Shanghai, and Hong Kong, traded lower, Tokyo managed to stay in positive territory. Wall Street, on the other hand, ended mostly higher on Monday, providing a glimmer of hope amidst the global uncertainty.

The sharp decline in the Indian stock market reflects the prevailing uncertainty and apprehension among investors. The US Fed's interest rate decision, the weakening rupee, and FII selling are key factors contributing to this market volatility. While the outcome of the Fed meeting will likely dictate the market's direction in the short term, investors are advised to remain cautious and adopt a wait-and-see approach. This market downturn serves as a reminder of the interconnectedness of global economies and the impact of external factors on domestic markets.