A Rough Ride to Year-End: Market Sentiment Sours on FII Outflows and Global Cues
The Indian stock market experienced a sharp downturn in the late afternoon trading session on Monday, December 30, 2024, wiping out early gains and leaving investors with a sense of unease as the year draws to a close. The BSE Sensex plunged around 850 points from its intraday high, while the NSE Nifty settled below the crucial 23,650 mark. A confluence of factors, including persistent selling by foreign institutional investors (FIIs), a depreciating rupee, and weak global cues, contributed to the negative sentiment. Market breadth remained weak, reflecting broad-based selling pressure.
Market Performance: A Sea of Red with Pockets of Green
The Sensex closed at 78,248, down 450 points, or 0.6 percent, from the previous close. The Nifty ended at 23,645, losing 168 points, or 0.7 percent. Both indices were down over 1 percent from their respective intraday highs. Most of the NSE sectoral indices closed in the red. However, there were a few notable exceptions. The Nifty Pharma index emerged as the top sectoral gainer, adding 1 percent. The Consumer Durable, FMCG and IT index ended mildly positive. Pharma stocks like Sun Pharma and Cipla provided some support, gaining 1.2 percent and 1 percent, respectively. The Nifty Auto index was the biggest loser of the day, dropping 1.4 percent. Other major underperformers included the Nifty Bank index (down 0.7 percent), along with energy, infrastructure, and metal indices, which fell between 0.5 and 1.5 percent each.
Top Gainers and Losers:
- Nifty Gainers: Adani Enterprises (up 7.5% at Rs 2,592), HCL Tech (up 2%), Tech Mahindra (up 1.7%)
- Nifty Losers: Hindalco (down 2.6%), Bharat Electronics, Trent, Tata Motors (down up to 2.5%)
Volatility on the Rise:
The India VIX, a gauge of market volatility, surged 5.5 percent to close at 13.97, indicating increased investor nervousness.
FII Outflows and Rupee Depreciation: Major Headwinds
The relentless selling pressure from FIIs continues to be a significant drag on the Indian market. The weakening rupee, hovering near 86 per dollar, has further exacerbated the situation. "The rupee's depreciation is making Indian equities less appealing to FIIs, who face diminishing returns in dollar terms," explained Mandar Bhojane, research analyst at Choice Broking.
Global Cues Add to the Gloom:
Adding to the domestic woes, global markets also offered little support. Most Asian indices traded lower, mirroring losses on Wall Street on Friday. The S&P 500 and Nasdaq 100 had declined over 1 percent as US investors booked profits ahead of the year-end and fretted over the uncertain international trade landscape for 2025. Bhojane noted that the lack of domestic triggers, combined with global uncertainties and lowered expectations for US rate cuts in 2025, is keeping the market under pressure.
Technical Outlook: Support and Resistance Levels
"Momentum is expected to be low," stated Anand James, Chief Market Strategist at Geojit Financial Services, suggesting limited upside potential despite maintaining 24,165 as a near-term target. He identified 23,750 as the Nifty's downside support, with a breach below 23,600 signaling further weakness.
A Cautious Outlook as 2024 Draws to a Close
The penultimate trading session of 2024 ended on a somber note, with the Indian stock market succumbing to selling pressure from FIIs, a weakening rupee, and negative global cues. The broad-based decline across most sectors highlights the prevailing risk-off sentiment. As we head into the final trading day of the year, market volatility is expected to remain elevated. The upcoming monthly auto sales data and the Q3 earnings season will likely provide the next major directional cues for the market. Investors will also be closely watching the movement of the rupee and any developments on the global front. The current market scenario underscores the importance of a cautious approach and careful stock selection, with a focus on sectors and companies that demonstrate resilience in the face of macroeconomic headwinds. The broader implication is that the Indian market is increasingly sensitive to global factors and that FII flows will continue to play a crucial role in shaping market direction in the near term.
