Benchmarks make gap-down opening after hawkish Fed rate cut

Indian equity benchmarks extended their previous session’s southward journey with gap-down opening on Thursday tracking sell-off in the global markets after the Fed delivered a 25-bps rate cut as expected but revised its projections to signal just two interest rate cuts next year compared to the four previously forecast, citing stubbornly high inflation. Also, investors braced for the looming Bank of Japan's interest-rate decision and comments from BOJ Governor Kazuo Ueda. Indian benchmark indices are trading deeply in red with cut of a percent each in early deals as FIIs continued to offload Indian equities, selling shares worth Rs 1,316.81 crore on December 18. Sensex lost over 800 points, while Nifty was trading below its crucial 24,000 mark.

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. On the sectoral front, stocks related to jewellery are in focus 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. 

The BSE Sensex is currently trading at 79376.42, down by 805.78 points or 1.00% after trading in a range of 79020.08 and 79515.63. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.67%, while Small cap index was down by 0.61%.

The top losing sectoral indices on the BSE were Metal down by 1.44%, PSU down by 1.24%, Auto down by 1.22%, Bankex down by 1.20% and Basic Materials down by 1.06%, while there was no gainer on the BSE sectoral front.

The sole gainer on the Sensex was ITC up by 0.01%. On the flip side, Asian Paints down by 2.27%, Mahindra & Mahindra down by 1.86%, Tata Steel down by 1.63%, Bajaj Finserv down by 1.54% and Kotak Mahindra Bank down by 1.37% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has projected the Indian economy to grow at 6.6 per cent in 2025-26, up from 6.4 per cent in the current fiscal year. Ind-Ra believes investments will be a key growth driver for the Indian economy in FY26, like in FY22 and FY24. The Indian economy has experienced a cyclical growth slowdown in the past three quarters, which it expects to reverse from the December quarter.

The GDP growth till FY24 was impacted by the aftereffects of Covid-19, even the base effect impacted the quarterly GDP growth. While the June quarter GDP growth of FY25 was impacted by the combination of a strong base effect and the general elections in May 2024, the growth in the July-September period witnessed the extended impact of weak private sector capex. Ind-Ra believes that the Indian economy is facing monetary, fiscal, and external tightening. While it expects monetary conditions to ease now, the fiscal and external tightening is expected to continue in FY26 as well.

Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra said ‘Nonetheless, the FY26 GDP growth is expected to be same as India's best decadal growth (FY11-FY20)’. It added growth and inflation forecast could, however, be affected by any tariff war, and any capital outflow, if the dollar continues to strengthen. It expects the retail inflation in FY26 to average at 4.4 per cent, lower than FY25 forecast of 4.9 per cent.

It noted ‘The timing of rate cut would depend on how the forthcoming data -- arithmetic of the FY26 Union Budget, inflation trajectory and evolving domestic and global landscape -- gels with the RBI's flexible inflation targeting approach’. It further said merchandise trade account is expected to remain in deficit of $308 billion in FY26 (FY25: $277.4 billion, FY24: $244.9 billion).

The CNX Nifty is currently trading at 23957.90, down by 240.95 points or 1.00% after trading in a range of 23870.30 and 24000.75. There were 2 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were Dr. Reddy's Lab up by 1.53% and ITC up by 0.04%. On the flip side, Asian Paints down by 2.69%, Mahindra & Mahindra down by 2.45%, Bajaj Finserv down by 1.94%, Wipro down by 1.92% and Bharat Electronics down by 1.91% were the top losers.

All Asian markets are trading lower; Taiwan Weighted lost 412.6 points or 1.78% to 22,756.07, Nikkei 225 slipped 309.51 points or 0.79% to 38,772.20, Hang Seng declined 198.43 points or 1% to 19,666.12, Jakarta Composite fell 118.62 points or 1.67% to 6,989.26, KOSPI dropped 37.03 points or 1.49% to 2,447.40, Shanghai Composite weakened 24.39 points or 0.73% to 3,357.82 and Straits Times was down by 15.86 points or 0.42% to 3,763.76.