The closing bell of 2024 echoed a sense of caution on Dalal Street as India's benchmark indices, the Sensex and Nifty, registered marginal losses in the year's final trading session. A pall of uncertainty hung over the market, primarily fueled by a significant downturn in the information technology (IT) sector, which reacted negatively to signals from the US Federal Reserve. While the broader market displayed a mixed performance, the overarching sentiment was one of apprehension as investors looked ahead to 2025. The year 2024 ended with a mixed note, making investors wonder what the new year would bring.
A Wobbly Finish: Sensex and Nifty Numbers
The S&P BSE Sensex, a barometer of 30 leading stocks, shed 109.12 points to close at 78,139.01. Meanwhile, the NSE Nifty 50, representing a broader basket of 50 companies, experienced a negligible dip of 0.10 points, ending the year at 23,644.80. These figures, though seemingly small, masked a more volatile trading session characterized by a V-shaped recovery, as described by Aditya Gaggar, Director of Progressive Shares. The market opened low, took a sharp dip, but then recovered significantly, though not enough to close in the green.
IT Sector: The Grinch of the Market
The IT sector emerged as the day's biggest underperformer. The Nifty IT index plunged 1.44%, reflecting investor concerns over the sector's prospects. This anxiety stems from the US Federal Reserve's recent hawkish stance, hinting at fewer interest rate cuts in 2025 than previously anticipated. Given that Indian IT companies derive a substantial chunk of their revenue from the US, this policy shift has raised concerns about future earnings.
FIIs on a Selling Spree
The Fed's stance has also triggered a rise in US Treasury yields, making emerging markets like India less attractive to Foreign Institutional Investors (FIIs). Consequently, FIIs have been on a selling spree, offloading Indian shares worth approximately $2.8 billion over ten consecutive sessions. This sustained selling pressure has further contributed to the market's subdued performance.
Gainers and Losers: A Mixed Bag
Despite the overall bearish sentiment, some stocks managed to buck the trend.
The top performers included:
- Bharat Electronics Limited (BEL)
- Oil and Natural Gas Corporation (ONGC)
- Kotak Mahindra Bank
- Trent
- Coal India
Conversely, the day's biggest losers were:
- Adani Enterprises
- Tech Mahindra
- Tata Consultancy Services (TCS)
- Infosys
- SBI Life Insurance
Technical Take: Reading the Charts
Aditya Gaggar of Progressive Shares noted the formation of a "Spinning Top" candlestick pattern on the Nifty chart, suggesting market indecision. However, he also pointed to a potential positive divergence in the Relative Strength Index (RSI), which could indicate a possible shift in momentum. According to Gaggar, the immediate resistance level for Nifty is at 23,700, with a further resistance at 23,880 if the trend reverses. On the downside, 23,470 remains a crucial support level.
Navigating Uncertainty in 2025
The year-end performance of the Indian stock market underscores the growing influence of global economic factors and central bank policies on domestic equities. The US Federal Reserve's stance has cast a shadow over the IT sector and triggered a significant outflow of foreign investment. As we step into 2025, investors will be closely monitoring global economic indicators, particularly from the US, along with domestic policy decisions. The market's trajectory will likely be shaped by how these factors unfold in the coming months. The mixed signals at the close of 2024 serve as a potent reminder of the inherent volatility and interconnectedness of global markets, setting the stage for a year that demands cautious optimism and a keen eye on evolving economic landscapes. The interplay between domestic resilience and external pressures will be a defining theme, making 2025 a year where astute market navigation will be more crucial than ever.
