Markets at day’s low; Sensex drops 900 pts to 80,800; Financials, Oil drag

Benchmark Indian equity indices BSE Sensex and Nifty 50 were trading lower on Tuesday, amid mixed global cues.

At 11 AM, the BSE Sensex was lower by 594.91 points, or 0.73 per cent, at 81,153.66, and the Nifty 50 was at 24,499.90, lower by 168.35 points, or 0.68 per cent.

At around 11:35 AM, only two stocks, Adani Ports & SEZ (up 0.75 per cent), followed by Tata Motors, were trading higher, while losses were capped by Bharti Airtel (down 2.19 per cent), followed by TCS, Power Grid Corp., Larsen & Toubro, and ITC.

On the Nifty 50, too, only five stocks, Cipla (up 1.39 per cent), followed by Adani Ports & SEZ, Tata Motors, Apollo Hospital Enterprises, and Tata Steel, were trading higher, while losses were capped by Shriram Finance (down 3.49 per cent), followed by Bharti Airtel, TCS, Power Grid Corp., and Larsen & Toubro.

Across sectors, the Financial Services index was the biggest loser, dragging 1.05 per cent, followed by the Bank Nifty and Oil & Gas, which were down 1.03 per cent each. The Consumer Durales, Auto, FMCG, IT, Metal, Pharma, and Healthcare indices were also trading lower.

However, in the broader markets, the Nifty Midcap 100 was higher marginally by 0.09 per cent, and the Nifty Smallcap 100 was lower by 0.02 per cent.

Investors in the Indian stock markets are continuing to tread cautiously as they await crucial policy rate decision by the US Federal Reserve, along with any commentary on timeline about how the central bank plans to proceed towards a more nutral policy rate in the next year.

But, the record high close on Wall Street for tech-heavy Nasdaq and a higher close for the S&P 500 index could provide some positive stock-specific momentum for markets here.

However, after a tumultous 2024, brokerages continue to recommend equities as a preferred asset class, apart from highlighting the key risks and oppotunities that investors need to be mindful of.

That apart, December is shaping up to be the busiest month for IPOs this year. With half a dozen companies announcing their listing plans on Monday, the total count has already reached 11. Investment bankers expect an additional 2-3 launches before the year ends.

Moreover, foreign portfolio investors (FPIs) have invested Rs 25,300 crore through the anchor book for IPOs in 2024, surpassing the Rs 20,351 crore invested by domestic mutual funds (MFs).

Not only that, institutional investors are increasingly becoming active in a stock market segment dedicated to small and medium enterprises (SMEs). Recent data reveals that the institutional share in SME IPOs has neared 50 per cent in December 2024, from a low single-digit share less than three years ago. Correspondingly, the share of retail investors has come down.

But, amid the recent market correction since October, the cash holding of equity mutual fund (MF) schemes has declined marginally to 5.4 per cent in November, the lowest level in four months. The decline came amid a 14 per cent month-on-month fall in net inflows into equity schemes.

On Monday, benchmark equity indices BSE Sensex and Nifty 50 ended in the red. The 30-share Sensex settled at 81,748.57, down 384.55 points or 0.47 per cent, while the Nifty 50 ended 100.05 points or 0.40 per cent lower at 24,668.25.

Notably, the broader markets outperformed the benchmarks, with the Nifty Midcap 100 ending higher by 0.77 per cent, followed by the Nifty Smallcap 100 index, which ended higher by 0.64 per cent. Sectoral indices, on the other hand, ended on a mixed note on Monday. Realty stocks soared in an otherwise weak market, with the Nifty Realty index ending higher by 3.10 per cent. Media, Pharma, and PSU Bank were other indices that ended in the green, while Nifty Financial Services, FMCG, IT, Metal, and OMC ended down by up to 0.97 per cent.

Markets in the Asia-Pacific region were trading mixed on Tuesday morning, tracking mixed gains on Wall Street. Australia’s S&P/ASX 200 was trading 0.84 per cent higher.

Japan’s Nikkei 225 rose 0.37 per cent and the Topix climbed 0.16 per cent. South Korea’s Kospi was down 0.72 per cent, while the Kosdaq dropped 0.75 per cent.

Hong Kong’s Hang Seng index was lower by 0.59 per cent, and the CSI 300 was behind by 0.16 per cent, while the Shanghai Composite was lower by 0.13 per cent.

Meanwhile, megacap tech shares muscled the S&P 500 and the Nasdaq to higher closes on Monday as US Treasury yields paused and investors readied for a busy central bank week. The tech-heavy Nasdaq also closed at a record high.

Bitcoin surged, touching a new high after US President-elect Donald Trump suggested he plans to set up a bitcoin strategic reserve. The FANG group of tech and tech-adjacent momentum stocks outperformed, gaining 2.7 per cent on the day.

The Federal Open Market Committee (FOMC) is due to convene on Tuesday for its last monetary policy meeting of 2024, which is expected to conclude with a 25 basis point cut in the key Fed funds target rate.

Investors will scrutinize the Fed’s Summary of Economic Projections (SEC) and its “dot plot,” which maps out the central bank’s future rate cut path, which has become less certain in light of recent data showing sticky inflation amid a relatively robust economy.

A report from S&P Global showed that US business activity has accelerated its expansion this month, despite ongoing weakness in the manufacturing sector.

Among central bank actions elsewhere, Sweden’s Riksbank is also expected to cut interest rates, while policymakers in Japan, Britain and Norway are seen holding steady.

Soft retail sales data from China underscored the need for more aggressive stimulus from Beijing.

The Dow Jones Industrial Average fell 110.21 points, or 0.25 per cent, to 43,717.85, the S&P 500 rose 23.03 points, or 0.38 per cent, to 6,074.12 and the Nasdaq Composite was up 247.17 points, or 1.24 per cent, to 20,173.89.

European shares closed lower, weighed down by heavyweight luxury goods and energy shares in the wake of China’s downbeat retail sales report. French stocks weighed on European markets after Moody’s unexpectedly downgraded the country’s rating on Friday.

MSCI’s gauge of stocks across the globe rose 1.62 points, or 0.19 per cent, to 867.76.

The STOXX 600 index fell 0.12 per cent, while Europe’s broad FTSEurofirst 300 index fell 1.38 points, or 0.07

Emerging market stocks fell 4.42 points, or 0.40 per cent, to 1,102.59. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 0.38 per cent, to 583.19, while Japan’s Nikkei fell 12.95 points, or 0.03 per cent, to 39,457.49.

Yields on 10-year US Treasuries steadied near three-week highs as investors awaited the Fed’s rate decision on Thursday. The yield on benchmark US 10-year notes fell 0.4 basis points to 4.395 per cent, from 4.399 per cent late on Friday.

The 30-year bond yield fell 1.2 basis points to 4.6023 per cent from 4.614 per cent late on Friday. The 2-year note yield rose 0.2 basis points to 4.243 per cent, from 4.241 per cent late on Friday.

The greenback was hovering near three-week highs as investors anticipated that the Fed could signal a more measured pace of easing in the coming year.

The dollar index, which measures the greenback against a basket of currencies, fell 0.01 per cent to 106.86, with the euro up 0.07 per cent at $1.0509.

Bitcoin touched a new high, topping $106,000 after Trump indicated the possible establishment of a bitcoin reserve fund. Bitcoin gained 3.10 per cent to $106,015, while Ethereum rose 4.94 per cent to $4,046.40.

Crude oil prices settled lower as soft data from China fed fears of softening demand from the world’s largest oil importer. US crude fell 0.81 per cent to settle at $70.71 per barrel, while Brent dropped to $73.81 per barrel, down 0.78 per cent on the day.

Gold prices inched higher as the dollar eased ahead of the central bank decision. Spot gold rose 0.17 per cent to $2,652.29 an ounce. US gold futures fell 0.15 per cent to $2,652.00 an ounce.