Benchmark indices likely to make gap-down opening amid global sell-off

Indian markets ended lower on Wednesday for the third consecutive session amid continued selling by foreign portfolio investors (FPIs). Today, benchmark indices are likely to make gap-down opening tracking sell-off in the global markets following the US Federal Reserve's interest rate cut. The central bank delivered its third consecutive rate cut but signaled a slowdown in future reductions, leaving investors wary. The Fed trimmed its benchmark interest rate by a widely anticipated 25 basis points (bps), bringing it to a target range of 4.25 per cent-4.5 per cent. However, the Fed’s accompanying guidance dampened optimism. The updated dot plot suggests only two more rate cuts in 2025 - half of what was forecasted in September. Domestically, investors will closely monitor the Nifty50 expiry scheduled for today, which is expected to influence market volatility and trading sentiment. Some pessimism will come as FIIs continued to offload Indian equities, selling shares worth Rs 1,316.81 crore on December 18. However, some respite may come later in the day as India Ratings and Research said gradual improvement in consumption demand and investments from both the public and private sector due to monetary easing are expected to push India’s economy to grow a tad faster at 6.6 per cent in the financial year 2025-2026 (FY26) compared with the downward revised projection of 6.4 per cent for the current financial year. Some support may come as the latest data released by the Income Tax (I-T) department showed that net direct tax collections grew 16.45 per cent to Rs 15.82 trillion between April 1 and December 17 of FY25. Besides, the Securities and Exchange Board of India (Sebi) approved several major regulatory changes, in its latest board meeting. These include stricter norms for listing small and medium enterprises (SMEs), an expanded definition of price-sensitive information, and revamped regulations for investment bankers. Garment and textile industry stocks will be in focus as Cotton Association of India (CAI) said India's cotton exports are likely to decline 36.53 per cent in the 2024-25 season, beginning from October 1, to 18 lakh bales due to lower production following shrinking acreage of the crop in the north and Gujarat. It added the total exports during the 2023-24 season stood at 28.36 lakh bales. There will be some reaction in stocks related to jewellery as Gem and Jewellery Export Promotion Council (GJEPC) said gems and jewellery exports saw a decline of 12.94 per cent to $1,986.21 million (Rs 16,763.13 crore) in November on prolonged geopolitical tension. It added gems and jewellery exports in November 2023 stood at $2,281.4 million. Meanwhile, a fresh wave of Mainline IPOs is ready to hit the market. Concord Enviro IPO, Sanathan Textiles IPO, Mamata Machinery IPO, DAM Capital IPO, and Transrail Lighting IPO are all set to open their public issues.

The US markets ended sharply lower on Wednesday after the US Federal Reserve delivered a rate cut as expected but signaled it will ease the pace of further cuts in the coming year. Asian markets are trading in red on Thursday following a sharp sell-off on Wall Street.

Back home, Indian equity benchmarks continued their losing run for the third straight session on Wednesday as nervous investors braced for the US Federal Reserve's interest rate decision due later in the day. Markets made a negative start and extended losses as the day progressed amid foreign fund outflows. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 6,409.86 crore on Tuesday, according to exchange data. Some concern came as the Global Trade Research Initiative (GTRI) stated that India's gold imports have surged alarmingly, posing a potential threat to its trade balance and economic stability, and the government should take action to address this issue. It said the imports are driven by multiple factors, including growing investment demand, tariff reductions, and loopholes in trade agreements and this surge has raised significant economic concerns, distorting the trade balance, weakening the rupee, and widening the current account deficit. Markets continued to reel under pressure in late afternoon session as traders were anxious with a private report stating that India’s foreign aid has dipped post-pandemic but has also become more varied than before. The average aid per annum declined to Rs 5,011 crore in the four years since FY22 as compared with Rs 5,805 crore in the four years leading up to Covid. Adding to the worries, US President-elect Donald Trump has set the stage for a potential trade conflict with India, threatening to impose reciprocal tariffs if the country continues to levy high taxes on American goods. Traders took a note of a CAG audit report stating that the commerce ministry needs to properly monitor the scheme to promote exports, EPCG, as it not only allows duty-free imports of capital goods but also grants a long gestation period for meeting the export obligation. Traders overlooked Finance Minister Nirmala Sitharaman’s statement that the lower-than-expected Gross Domestic Product (GDP) growth of 5.4 per cent in the second quarter (Q2) was a ‘temporary blip’ and the economy will see healthy growth in the coming quarters. She said India has seen ‘steady and sustained’ growth and its GDP growth rate has averaged 8.3 per cent in the last three years. Finally, the BSE Sensex fell 502.25 points or 0.62% to 80,182.20, and the CNX Nifty was down by 137.15 points or 0.56% to 24,198.85.