On December 17, 2024, Indian equity markets faced a sharp decline, with the BSE Sensex falling by 1,015.64 points or 1.2 per cent, and the NSE Nifty dropping 284 points to settle below 24,400. Weak global cues, combined with a depreciating rupee and lacklustre investor sentiment, triggered significant selling in key sectors such as finance, metal, FMCG, and IT stocks.

US Federal Reserve and global market jitters

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Global markets continued to experience pressure, contributing to the downtrend in Indian equities. Investor caution ahead of the US Federal Reserve’s upcoming interest rate decision exacerbated the situation. The uncertainty surrounding the Fed’s stance on future rate hikes and global economic trends kept investors on edge, influencing the Indian market’s performance.

Rupee at a record low

The rupee further weakened, hitting an all-time low of 84.92 against the US dollar, largely due to foreign institutional investor (FII) outflows and a growing trade deficit. The record trade deficit in November, primarily driven by increased gold imports, contributed to this decline in the rupee's value, amplifying concerns over the country's economic stability.

FII outflows dampen market sentiment

Foreign Institutional Investors (FIIs) continued their selling spree, with net outflows of Rs 279 crore on December 16. This lack of fresh buying activity, coupled with persistent global uncertainties, kept the market sentiment subdued. The absence of positive cues from FIIs added to the downward pressure on Indian indices.

Sectoral impact and heavy sell-offs

The major sectors, including finance, FMCG, and IT, witnessed heavy selling pressure. Blue-chip stocks such as Reliance Industries, Bharti Airtel, HDFC Bank, and Titan were among the major laggards, contributing to the steep fall in the indices.

Market outlook remains cautious

With global uncertainties, the weak rupee, and FII outflows persisting, the outlook for the Indian markets remains cautious.