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Informist, Tuesday, Dec. 17, 2024

By Anjana Therese Antony

MUMBAI – While the overall market saw a sharp fall on caution ahead of the US Federal Reserve's policy outcome this week, Cipla was the sole gainer in the Nifty 50 index. Losses in financial services and information technology stocks continued for the second straight session on caution ahead of the US policy decision. All 30 constituents of the BSE Sensex ended in the red. Depreciation of the domestic currency was another factor that pulled the market lower and led to likely foreign outflows, analysts said. The rupee ended at a record closing low of 84.8950 as India's November trade deficit hit a lifetime high of $37.84 billion, which triggered panic selling, in the market Tuesday, likely led by FIIs. 

Though the market has factored in a 25-basis-point reduction in the US federal fund rates, the uncertainty about future rate trajectory is keeping investors wary, analysts said. "Uncertainty is something that any market does not like. Here, like how it was in the past, Fed is unlikely to give any futuristic comments about rates," a senior research analyst at a domestic broking firm said. 

According to the CME FedWatch Tool, there is a 96.3% possibility that the US Fed will reduce rates by 25 bps. In September, the Fed started its rate-cut cycle with a 50-bps reduction after keeping rates at an over two-decade high for more than a year. It further reduced rates by 25 bps in November to 4.50-4.75%. However, the apex bank's comments that it was not in a hurry to cut rates dented sentiment recently. The benign US inflation data and signs of tighter labour market then came as relief for investors, again fuelling hopes of further rate cuts. 

Back home, Cipla was the sole gainer on the Nifty 50 and closed 0.2% higher at INR 1,450.85 on the National Stock Exchange. The stock had hit an intra-day high of INR 1,483 after Kotak Institutional Equities upgraded the stock to 'buy' from 'add' with a target price to INR 1,725. The broking firm expects Cipla to benefit from a slew of US launches lined up and also witness healthy growth in South Asia. 

The Nifty 50 closed 1.4% lower at 24336 points and the BSE Sensex ended 1.3% down at 80684.45 points. The near-term support for the 50-stock index is pegged at 24300-24280 points and resistance at 24400-24490 points, a derivatives analyst at a domestic broking firm said.

Other short-term concerns for investors include expensive valuations of domestic equities and the slightly bearish approach of foreign investors. FIIs, who were net sellers in October and November, started to sell less in December. On Monday, they net sold shares worth INR 2.79 billion after purchasing INR 23.35 billion worth of equities on Friday. Analysts said the market correction in October and November has not brought valuations to decent levels and that FIIs may wait for further correction for fresh buys. Even domestic investors, who had supported the Indian market from a significant fall in October and November, were net sellers in the last two sessions, offloading shares worth nearly INR 10 billion. 

Some fertiliser stocks rose in a weak market after reports said that prices of di-ammonia phosphate are expected to increase by 12-15% per bag after nearly four years. The increase in price was due to a spike in raw material prices, the Business Standard newspaper reported Tuesday. India imports nearly 11 million tonnes of diammonium phosphate, which is half of its annual requirement for the fertiliser. Shares of Rashtriya Chemicals & Fertilizers hit an over one-month high of INR 188.89 and closed 4.6% higher at INR 184.58. Another gainer was Madras Fertilizers which ended 2.7% higher. Other stocks, which rose during the day, mirrored the fall in the overall market and closed slightly lower. 

* Of the Nifty 50 stocks, 1 rose and 49 fell

* All 30 constituents of Sensex fell

* On the NSE, 1,576 stocks rose, 2,442 fell, and 89 were unchanged

* On the BSE, 953 stocks rose, 1,845 fell, and 81 were unchanged

* Nifty PSU Bank: down 1.8%; Nifty Metal: down 1.6%; Nifty Media: up 0.02%

BSE                                               NSE

Sensex: 80684.45, down 1064.12 points or 1.3%     Nifty 50: 24336.00, down 332.25 points or 1.4%        

End

US$1 = INR 84.89

Edited by Akul Nishant Akhoury

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