Stock Market Crisis: Sensex and Nifty 50 Decline for Four Straight Sessions, Investors Lose Over ₹9 Lakh Crore in 4 Days.
“Stock Market Plunge: Sensex Crashes Nearly 1,200 Points, Nifty Falls to 23,870 Amid Slower US Fed Rate Cut Expectations
The Indian stock market endured a brutal selloff on Thursday, December 19, marking its fourth consecutive day of losses. The benchmark Sensex plunged nearly 1,200 points, while Nifty 50 tumbled back to the 23,870 mark during intraday trade, following signals from the US Federal Reserve that the pace of rate cuts could slow down.
Over the past four sessions, the Sensex has dropped 3.5%, and the Nifty 50 has lost 3.3%. On Thursday, the Sensex opened at 79,029.03, down from its previous close of 80,182.20, and dipped by 1,162 points to hit an intraday low of 79,020.08. Similarly, Nifty 50 opened at 23,877.15 and fell 329 points to 23,870.30.
Despite the sharp decline, the market managed to recover some losses by the close. The Sensex finished the day down 964 points (1.20%) at 79,218.05, while the Nifty 50 closed 247 points (1.02%) lower at 23,951.70.”
“Mid and Small-Cap Stocks Outperform While Large Caps Struggle Amid Market Selloff
In a stark contrast to the performance of large-cap stocks, the mid- and small-cap segments showed resilience on Thursday. The BSE Midcap index saw a modest decline of 0.30%, while the BSE Smallcap index fell by just 0.28%.
The overall market capitalisation of BSE-listed companies dropped to nearly ₹450 lakh crore, down from ₹453 lakh crore in the previous session, resulting in a loss of nearly ₹3 lakh crore in a single day. Over the past four days, investors have seen a staggering ₹9 lakh crore wiped out, as the total market capitalisation stood at ₹459 lakh crore on Friday, December 13.
What Caused the Indian Stock Market to Drop Today?
Here are five main factors behind the decline in the Indian stock market today:
- US Federal Reserve’s Rate Cut Outlook
Even though the US Federal Reserve lowered interest rates by 0.25% to 4.25-4.50% on December 18, its future outlook caused worry. The Fed only expects two more small rate cuts by 2025, instead of the three or four rate cuts the market had hoped for. This led to a global market sell-off, including major falls in Asian markets, and caused the US dollar to rise sharply. - Foreign Selling of Indian Stocks
Foreign institutional investors (FIIs) have been selling Indian stocks recently. In the last three days, they sold over ₹8,000 crore worth of shares. This selling is mainly due to a stronger dollar, rising bond yields, and fewer expected rate cuts by the US Fed. While domestic investors are buying, their efforts are not enough to offset the outflow of foreign capital. - Weak Indian Rupee
The Indian rupee hit a record low of ₹85.3 per US dollar on Thursday. A weak rupee discourages foreign investors because they lose out when converting their earnings back to their home currency. It also makes imported goods more expensive, raising inflation, which could lead to tighter monetary policies, further hurting the market. - Economic Worries
Concerns over India’s economy have also affected market sentiment. The country’s trade deficit, which is the gap between imports and exports, hit a record high of $37.84 billion in November. Additionally, India’s economic growth is slowing down, with GDP growth at its lowest in almost two years. - Earnings Uncertainty
After weak earnings reports from Indian companies in the first two quarters of the year, all eyes are now on the earnings for the December quarter (Q3). While some experts expect a recovery, they believe a strong rebound may only happen in the last quarter (Q4). Without a clear earnings recovery, stock prices might remain weak in the near future.
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