As the year draws to a close, a sense of unease has settled over Dalal Street, India's financial hub. Instead of the usual year-end rally, the stock markets are grappling with a bearish trend, leaving investors concerned about their portfolios and the overall market outlook. The benchmark indices, the Sensex and Nifty, have been on a downward trajectory, raising questions about whether 2024 will end with a whimper rather than a bang.
Market performance and key figures:
The Sensex has plummeted by 1,951 points over the past three trading sessions, closing at 80,182.20 on December 18th, a drop of 502.25 points for the day. The Nifty50 mirrored this decline, shedding 137.15 points to settle at 24,198.85. This downward spiral has wiped out a significant portion of investors' wealth, with the market capitalization of BSE-listed firms shrinking by Rs 6 lakh crore in just three sessions.
Factors contributing to the decline:
Several factors are contributing to this year-end market slump:
- US Federal Reserve Policy: Uncertainty surrounding the upcoming US Federal Reserve meeting and potential policy changes in the new year is weighing heavily on investor sentiment.
- Rupee Weakness: The Indian rupee's depreciation against the US dollar is adding to the market's woes.
- Foreign Fund Outflows: Foreign institutional investors (FIIs) have been selling off Indian equities, contributing to the downward pressure.
- Sectoral Weakness: Banking, metals, and energy sectors have been particularly hard hit, dragging down the overall market.
Outlook for 2025:
Despite the current gloom, there is optimism for the year ahead. ICICI Securities predicts a potential upside of up to 20% for the Nifty50 in 2025, with the index potentially reaching 28,800. This optimism is based on historical trends, including market performance in election years and after periods of significant FII selling.
The Indian stock market is facing a challenging end to 2024. However, amidst the uncertainty, there are glimmers of hope for the future. The US Fed's policy decisions and the incoming US administration's stance on trade will play a crucial role in shaping market sentiment in the coming months. While the short-term outlook remains cautious, historical trends and expert predictions suggest that 2025 could bring renewed optimism and potential gains for investors. The key lies in navigating the current volatility and staying informed about the evolving economic landscape.
