Key gauges extend losses on hawkish Fed commentary

Indian equity benchmarks extended losses for the fourth straight session on Thursday due to losses in Banking, Consumer Durables and IT stocks. Markets opened with a downside gap and moved in a narrow range throughout the session as the sharp sell-off was triggered by global market weakness after the US Federal Reserve signaled fewer interest rate cuts in 2025. While the Fed had widely anticipated a 25-basis-point rate cut, its forecast for just two further quarter-percentage-point reductions next year was more conservative than previously expected. The central bank's projection, citing persistent inflation and strength in the US economy, signaled a more cautious approach than investors had hoped for. Some concern also came as 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. Traders also paid no heed towards the 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.

On the global front, European markets were trading lower as investors braced for the Bank of England's last meeting of the year later in the day. The central bank is widely expected to hold rates at 4.75 percent after data showed a high rate of wage growth and inflation above the bank's 2 percent target. Asian markets settled mostly down on Thursday after the U.S. Federal Reserve warned it would be cautious about more interest cuts in the face of inflation concerns. 

Back home, on the sectoral front, tourism and hospitality sector’s stocks were in focus as joint report by the Confederation of Indian Industry (CII) and EY has said that the country’s tourism and hospitality sector is projected to require an additional 61.31 lakh workers to cater to an increasing tourism activities by 2036-37. Stocks related to Gem and Jewellery sector also were in watch 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.

Finally, the BSE Sensex fell 964.15 points or 1.20% to 79,218.05, and the CNX Nifty was down by 247.15 points or 1.02% to 23,951.70.           

The BSE Sensex touched high and low of 79,516.17 and 79,020.08 respectively. There were 3 stocks advancing against 27 stocks declining on the index. 

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

The few 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 down by 1.05% were the top losing indices on BSE.

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

Meanwhile, 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.

The collection includes corporate tax of over Rs 7.42 lakh crore and non-corporate tax mop-up of Rs 7.97 lakh crore. Securities Transaction Tax (STT) of Rs 40,114 crore was collected between April 1-December 17 of current fiscal year. 

Refunds worth Rs 3.39 lakh crore were issued during the period, registering a growth of 42.49 per cent year-on-year. Gross direct tax collection, which includes corporate, personal income tax and STT stood at over Rs 19.21 lakh crore, a 20.32 per cent growth over the collection in April 1-December 17, 2023.

The CNX Nifty traded in a range of 24,004.90 and 23,870.30. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 4.04%, Cipla up by 2.15%, BPCL up by 2.05%, Sun Pharma up by 1.12% and Apollo Hospital up by 1.04%. On the flip side, Bajaj Finserv down by 2.33%, JSW Steel down by 2.31%, Bajaj Finance down by 2.25%, Grasim Industries down by 2.20% and Asian Paints down by 2.15% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 103.71 points or 1.28% to 8,095.40, France’s CAC fell 106.74 points or 1.47% to 7,277.88 and Germany’s DAX lost 205.99 points or 1.03% to 20,036.58.

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.