Markets May See Downtrend In Near Term As It Adjusts To Prospect Of Lower Pace Of Rate Cuts; M-cap of all listed BSE companies decreased by 2.73 lakh crores to 449.87 lakh crores
Satish Chandra Aluri,
Lemonn Markets Desk
Mumbai, 19 December, 2024: Benchmarks ended sharply lower on Thursday extending losses for fourth consecutive session after US Fed indicated fewer rate cuts in 2025. Markets opened sharply lower following overnight sell-off in US markets and weak opening in Asian indices. The M-cap of all listed BSE companies decreased by 2.73 lakh crores to 449.87 lakh crores.
Markets got an unexpected jolt after US Fed meeting despite the cautious positioning going into the meeting as evident from daily losses so far this week. However, US Fed has delivered much more hawkish outlook than what markets were anticipating after Powell flagged significant uncertainty on inflation outlook for 2025 given the trade war risks once Trump takes office in Jan 2025. New economic projections released by US Fed showed only 2 rate cuts in 2025 compared to almost 4 just 3 months ago. This has triggered a sharp jump in US Treasury yields and US Dollar which had a domino effect across the asset classes with sharp falls in Equities and Commodities including Gold. Emerging markets like India had double whammy of accelerated foreign outflows as INR hits record lows on Dollar strength. So far this week itself, foreigners had net sold ~8000cr and this is set to accelerate further in near term.
Markets may see renewed downtrend in the near term as it adjusts to prospect of lower pace of rate cuts while growth and inflation uncertainties rise.
Pharma is sole major sector to post gains while other defensive segment FMCG also fared relatively better. U.S.-rate sensitive IT stocks along with Financials and Metals are worst performing sectors. IT firms lost due to their reliance on U.S. revenues, while metal stocks fell 1.3%, tracking global peers amid a stronger dollar.
For benchmark Nifty 50, market closed below the key 24000 level and may extend declines further with next support expected around the crucial 238000 level. On the upside, market may find resistance around 24000. Bank Nifty also extended losses with next support at the 51200 level.
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