Market Overview: A Weak Finish to the Session
Indian equity markets ended Thursday’s session on a weak note, with major indices slipping under the weight of global uncertainty. The Sensex dropped 592.67 points, or 0.7%, to close at 84,404.46, while the Nifty declined by 176.05 points, or 0.68%, settling below the crucial 25,900 mark. The sell-off came as investors digested the U.S. Federal Reserve’s cautious tone following its latest policy decision, along with renewed foreign institutional investor (FII) outflows that pressured sentiment across sectors.
Fed’s December Rate Cut Doubts Rattle Global Sentiment
The U.S. Federal Reserve cut its benchmark interest rate by 25 basis points, as widely anticipated. However, Fed Chair Jerome Powell’s comments following the decision unsettled investors. While acknowledging progress on inflation, Powell emphasized that further easing would depend on incoming data — a stance that disappointed markets hoping for a clearer signal of continued rate cuts.
Powell noted that “downside risks to employment have risen,” but also warned that sticky inflation could limit the Fed’s ability to ease policy quickly. His message: the Fed is not in a rush to loosen monetary conditions, especially amid the ongoing U.S. government shutdown, which has disrupted economic data releases.
Ross Maxwell, Global Strategy Lead at VT Markets, summed up the sentiment: “Stocks and bonds both fell after Powell struck a more cautious tone. The Fed is easing, but with restraint — and that uncertainty could fuel volatility in the coming weeks.”
FII Outflows Add to the Pressure
Adding to the domestic headwinds, foreign institutional investors turned net sellers, offloading shares worth ₹2,540.16 crore in Wednesday’s session. Persistent FII outflows often indicate risk aversion among global investors, particularly when U.S. yields rise and the dollar strengthens. This capital movement has been a consistent drag on Indian equities, limiting upside momentum even as domestic investors remain net buyers.
Sectoral Performance: Pharma, Insurance, and Telecom Drag
The day’s biggest laggards included Dr. Reddy’s Laboratories, HDFC Life Insurance, Sun Pharma, Bharti Airtel, and Tata Steel — each declining up to 5%. The broader BSE Midcap and Smallcap indices also ended lower, reflecting a risk-off mood across the market spectrum. Analysts pointed out that profit-taking in recent outperformers, coupled with weak global cues, contributed to the day’s fall.
What Lies Ahead for Investors
With the Fed signaling caution and foreign funds turning sellers, short-term volatility may persist. Investors will closely monitor global inflation data, crude oil prices, and U.S. economic indicators for direction. Domestically, corporate earnings and festive season demand trends could influence sentiment going forward.
Market strategists suggest maintaining a stock-specific approach and focusing on sectors with strong balance sheets and steady earnings growth. Banking, capital goods, and IT remain preferred picks for long-term investors.
