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Informist, Friday, Dec. 20, 2024

By Anjana Therese Antony

MUMBAI – The domestic equity market took a breather from a four-week winning run and ended the week sharply lower, mainly due to the hawkishness of the US Federal Reserve on future interest rate trajectory. The Fed Chair Jerome Powell said the pace of interest rate cuts would be slower than what it had earlier expected. The apex bank hinted at a 50-basis-point reduction in rates in 2025, instead of the earlier 100 bps. This continued to pull shares of domestic financial services and information technology stocks sharply lower, which contributed the most to the fall in the Nifty 50.

The market lost most of the gains it made in the last four weeks. Benchmark indices, which rose more than 5% in the previous four weeks, declined 4.8% this week. They also fell around 10% from their record highs hit on Sept. 27. On Friday, the Nifty 50 and Sensex ended 1.5% lower each at 23587.50 points and 78041.59 points, respectively. The Nifty 50 and Sensex breached key support levels of 24000 points and 79000 points, respectively. The immediate support of the Nifty 50 is seen at 23500-23450 points and resistance at 23680-23730 points, a derivatives analyst at a domestic broking firm said. Nearly 79% of stocks traded on the National Stock Exchange closed lower on Friday and 72% of stocks listed on BSE ended in the red. 

The US Federal Open Market Committee reduced the Fed funds target range by 25 bps to 4.25-4.50%. "Interest rate cuts in India may be delayed as the interest rate spread over the US remains the lowest in recent history and Trump policies appear inflationary," ICICI Securities said in its strategy report. The broking firm also said the rising current account and fiscal deficits in the US and a synchronous rise in inflation projections are key risks to the US economy. 

The hawkish tone of the US apex bank led to sharp losses in shares of Indian IT companies, which have a majority of their revenue earned from clients in the US. The fall in the five IT constituents in the Nifty 50 contributed more than 0.2% of the fall in the index. Wipro and Tech Mahindra were the major laggards in the 50-stock index and closed lower by 2.4% and 3.9%, respectively. The Nifty IT was the third-most sectoral laggard and closed 2.6% lower at 43771.05 points, with all 10 constituents in the red. 

The upward revision in revenue growth guidance of US-based IT company Accenture could not help Indian IT peers recover from the US Fed-led shock. Analysts said the new growth guidance of Accenture bodes well for the IT sector as it hints that the outlook for the industry will continue to improve. The US company raised its guidance for 2024-25 (Sept-Aug) to 4-7% from 3-6% earlier. 

Shares of banks and financial services companies also continued their downward journey Friday. Like the benchmark indices, the Nifty Bank also snapped a four-week winning streak and closed lower. The sector contributed to over 0.3% of the fall in the Nifty 50 index. 

On the other hand, some insurance stocks surged ahead of the GST Council's meeting on Saturday, which is likely to consider reducing taxes on health and life insurance premiums. Shares of General Insurance Corp. Of India skyrocketed and closed 13.2% higher at INR 501 on the NSE and was the top gainer on the Nifty 500. The New India Assurance Co. ended 4.3% higher at INR 214.10. Among slight gainers were ICICI Lombard and General Insurance Co. and HDFC Life Insurance Co. 

Among specific stocks, MTAR Technologies closed nearly 6% higher at INR 1,722.20 after the company got orders worth INR 2.3 billion. International Gemmological Institute (India), which debuted on bourses on Friday, closed 12.8% higher on the BSE at INR 470.15. 

* Of the Nifty 50 stocks, 4 rose and 46 fell

* Of the Sensex stocks, 2 rose and 28 fell

* On the NSE, 551 stocks rose, 2,261 fell, and 66 were unchanged

* On the BSE, 1,045 stocks rose, 2,950 fell, and 90 were unchanged

* Nifty PSU Bank: down 2.7%; Nifty IT: down 2.6%; Nifty Auto: down 2.1%

BSE                                               NSE

Sensex: 78041.59, down 1176.46 points or 1.5%     Nifty 50: 23587.50, down 364.20 points or 1.5%

End

Edited by Saji George Titus

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