• Indian indices Sensex and Nifty dropped over 1% due to heavy selling by Foreign Institutional Investors (FIIs), rising US bond yields, and Middle East conflicts.
• Tata Steel, JSW Steel, IndusInd Bank, and others were the top losers in the Sensex pack.
• Global factors, including the US Presidential elections and the performance of the global economy, also influenced the market's performance.
• The market's performance serves as a reminder of the interconnectedness of global economies and the impact of international events on domestic markets.

The Indian benchmark indices Sensex and Nifty experienced a significant drop of more than 1 per cent on Friday, December 13, 2024. The Sensex fell by 1,017.03 points or 1.25 per cent, landing at 80,272.93, while the Nifty fell by 306.80 points or 1.25 per cent, settling at 24,241.90. The market trend remained predominantly negative, with 340 stocks trading in green and a staggering 2,047 stocks in red on the National Stock Exchange (NSE).

The market turmoil was primarily attributed to heavy selling by Foreign Institutional Investors (FIIs), rising US bond yields, and ongoing conflicts in the Middle East. The impending decision by the Federal Reserve on interest rates on December 18 further exacerbated market concerns. FIIs sold shares worth Rs 3,560.01 crore in the Indian market on December 12, while domestic institutional investors bought shares worth Rs 2,646.65 crore on the same day.

Market experts opined, In the near term, the market has a headwind and a tailwind. The headwind is the resumption of selling by the FIIs who sold stocks for Rs 3,560 crore yesterday. Given the high valuations in India, FIIs are likely to sell more at every market rise.

Market Losers and Sectoral Front

In the Sensex pack, Tata Steel, JSW Steel, IndusInd Bank, Axis Bank, Bajaj Finserv, SBI, M&M, and Bajaj Finance were the top losers. In the broader market, Nifty Bank was down 839.65 points or 1.58 per cent at 52,376.80, Nifty Midcap 100 index was trading at 58,082.85 after dropping 938.85 points or 1.59 per cent. Nifty Smallcap 100 index was at 19,074.70 after dropping 391.85 points or 2.01 per cent.

On the sectoral front, heavy selling was seen in Nifty PSU Bank, metal, realty, auto, IT, pharma, and FMCG sectors. The rupee has been seeing a constant decline and hit an all-time low on Thursday. Reuters reported that the central bank is likely intervening through state-run banks to sell dollars, aiming to stabilize the rupee and prevent it from weakening like other Asian currencies.

Global Factors and Market Performance

The market's performance was also influenced by global factors. Retail inflation declined in November to 5.48 per cent and came within the Reserve Bank's comfort zone mainly due to easing food prices, creating headroom for a rate cut at the central bank's rate-setting panel meeting under new Governor Sanjay Malhotra in February. The Consumer Price Index (CPI) based headline inflation was at 6.21 per cent in October and 5.55 per cent in November 2023.

India's industrial production (IIP) growth slowed to 3.5 per cent year-on-year in October 2024, mainly due to poor performance of mining, power, and manufacturing, as per official data released on Thursday. In Asian markets, Tokyo, Shanghai, and Hong Kong were trading lower while Seoul quoted higher. Global oil benchmark Brent crude dipped 0.04 per cent to USD 73.38 a barrel.

The market's performance was also influenced by the US Presidential elections. Donald Trump secured a second term as president after winning in crucial battleground states. This victory is expected to have global implications, particularly impacting nations like India. The Republican victory is likely to see the US retreat from all global climate initiatives - much like we saw in the first Trump presidency. This is likely to slow momentum to combat climate change unless other parts of the world step up and fill the gap.