Post Session: Quick Review

Indian markets ended deep in red on Thursday following the Federal Reserve's more cautious outlook on futures rate cuts.  Nifty and Sensex settled below the psychological 24,000 and 79,300 levels respectively. Markets did not once break out in green and remained firmly placed in the red territory throughout the day. Besides, banking and IT sector’s stocks witnessed heavy losses. As for broader indices, the BSE Mid cap index and Small cap index ended in red.

Markets made negative start and remained in red 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. Besides, Foreign Institutional Investors (FIIs) outflow also dented investors sentiments. Foreign Institutional Investors (FIIs) continued to offload Indian equities, selling shares worth Rs 1,316.81 crore on December 18. Traders overlooked India Ratings and Research’s (Ind-Ra) report in which it 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. In afternoon session, indices continued to sag under weakness, as traders paid no heed towards data released by the Central Board of Direct Taxes (CBDT) has showed net direct tax collection grew 16.45 per cent year-on-year to over Rs 15.82 lakh crore till December 17 this fiscal, buoyed by higher advance tax mop-up. Advance tax collection during the period rose 21 per cent to Rs 7.56 lakh crore. In late afternoon session, indices maintained their lackadaisical trade. 

On the global front, European markets were trading lower after the Federal Reserve signalled a slower pace of interest rate cuts next year, citing inflation risks. Asian markets ended mostly lower after the U.S. Federal Reserve warned it would be cautious about more interest cuts in the face of inflation concerns. Back home, Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi has said that the country's high interest rates are a big deterrent for exporters community and the commerce ministry is working with its finance counterpart to help them at this front.

The BSE Sensex ended at 79,218.05, down by 964.15 points or 1.20% after trading in a range of 79,020.08 and 79,516.17. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.30%, while Small cap index was down by 0.28%. (Provisional)

The only gaining sectoral index on the BSE was Healthcare up by 0.89%, while Bankex down by 1.16%, Consumer Durables down by 1.15%, IT down by 1.13%, Capital Goods down by 1.07% and TECK was down by 1.05% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 1.32%, Hindustan Unilever up by 0.11% and Power Grid up by 0.09%. On the flip side, Bajaj Finserv down by 2.50%, JSW Steel down by 2.33%, Bajaj Finance down by 2.25%, Asian Paints down by 2.12% and ICICI Bank down by 1.83% were the top losers. (Provisional)

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 ended at 23,951.70, down by 247.15 points or 1.02% after trading in a range of 23,870.30 and 24,004.90. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy's Lab up by 3.94%, Cipla up by 2.32%, BPCL up by 2.17%, Sun Pharma up by 1.24% and Apollo Hospital up by 0.83%. On the flip side, Bajaj Finserv down by 2.53%, Asian Paints down by 2.29%, JSW Steel down by 2.21%, Bajaj Finance down by 2.20% and Grasim Industries down by 2.12% were the top losers. (Provisional)

European markets were trading lower; UK’s FTSE 100 decreased 101.3 points or 1.25% to 8,097.81, France’s CAC fell 91.84 points or 1.26% to 7,292.78 and Germany’s DAX was down by 205.84 points or 1.03% to 20,036.73.

Asian markets settled mostly down on Thursday, tracking Wall Streets’ overnight fall due to heavy selling pressure after the US Federal Reserve delivered a 25-bps interest 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. Market sentiments weakened further by investor worries that interest rates might be kept higher for longer due to policies proposed by US President-elect Donald Trump, including plans for tax cuts and widespread import tariffs. Chinese shares declined amid trade tensions as US authorities are contemplating a ban on China’s TP-Link routers due to cybersecurity risks, while China issued rules today to tighten scrutiny of foreign accounting firms' domestic operations as part of efforts to rein in accounting failures and fraud. Japanese shares fell, while the yen weakened following Bank of Japan's decision to refrain from raising interest rates.