• The Indian stock market saw a downturn, with the Sensex and Nifty ending lower amid mixed global cues.
• Despite the downturn, the realty sector outperformed, buoyed by expectations of growing demand and a potential rate cut cycle in 2025.
• Investors remain cautious due to the strengthening of the US dollar and rising US 10-year bond yields, awaiting the upcoming US Fed policy.
• The market's future trajectory will be determined by a combination of global factors, domestic economic indicators, and corporate earnings.

The Indian stock market experienced a downturn on Monday, with the Sensex settling at 81,748.57, a decrease of 384.55 points or 0.47 per cent. The Nifty also ended lower at 24,668.25, down by 100.05 points or 0.40 per cent. This decline was observed amid mixed global cues, with market experts noting a range-bound trading pattern in the national market. Despite the overall downturn, the realty sector outperformed, buoyed by expectations of growing demand and a potential rate cut cycle in 2025. This optimism was further bolstered by a rise in manufacturing and service PMI, suggesting a positive turnaround in H2 FY25 earnings. This could potentially limit further downgrades in FY25 earnings.

Market Performance Amid Global Developments

However, the strengthening of the US dollar and rising US 10-year bond yields have led investors to remain cautious of the upcoming US Fed policy and its commentary for 2025 rates. The Nifty Bank ended at 53,581.35, down by 2.45 points, or 0.00 per cent. The Nifty Midcap 100 index closed at 59,443 at the end of trading after rising 451.50 points or 0.77 per cent. The Nifty Smallcap 100 index closed at 19,531.05 after rising 123.75 points, or 0.64 per cent. On the Bombay Stock Exchange (BSE), 2,338 shares ended in green and 1,802 in red, whereas there was no change in 100 shares. On the sectoral front, buying was witnessed in the Auto, PSU Bank, Pharma, Realty, Media, and Private Bank sectors of Nifty.

In the Sensex pack, Titan, UltraTech Cement, NTPC, TCS, Bharti Airtel, Tech Mahindra, Infosys, Hindustan Unilever, JSW Steel, HCL Tech, Tata Steel, Tata Motors, HDFC Bank, and Nestle India were the top losers. IndusInd Bank, Bajaj Finance, Power Grid, M&M, and Axis Bank were the top gainers. The market is currently waiting for the US Federal Reserve (FED) scheduled for December 17-18. The rupee traded at 84.87 as the dollar strengthened, holding above the $106.50 mark. The rupee's trading range is expected to remain between 84.75 and 85.00 amid these developments, said experts.

Future Market Projections and Economic Indicators

In other news, the Indian frontline indices slipped into the red on Monday, December 16, following a strong pullback seen in Friday's session. Experts noted that investors exercised caution ahead of the US Federal Reserve meeting, with the policy outcome expected on December 18. Pharma and PSU stocks surged in today's session, while a sharp sell-off in IT and financial stocks dragged the indices lower. However, the broader markets withstood the pressure, ending the session in positive territory.

The Federal Reserve is widely expected to announce a 25-basis point interest rate cut on Wednesday, but traders are keenly awaiting the updated policy statement and forward guidance from Fed Chair Powell. Global brokerage firm UBS expects the sector to maintain its growth momentum, supported by record-high affordability, favourable regulatory reforms, increased developer consolidation, and stabilising interest rates.

In the domestic market, foreign investors are cautious due to subdued expectations for Q4 results and the high valuations of mid-cap and small-cap stocks. The IT sector continues to see consolidation, with weak Q4 earnings reflecting slowdowns in spending and uncertainties surrounding US interest rates.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.5 per cent and maintained the policy stance of 'withdrawal of accommodation' on Friday. Besides, the RBI raised its real GDP growth projection for FY24 to 7 per cent from 6.5 per cent earlier. However, the central bank kept the inflation forecast unchanged as it projected Consumer Price Index (CPI)-based inflation, or retail inflation, at 5.4 per cent for FY24.

The RBI sounded optimistic about India's economic growth even though it highlighted that the global economic environment remains fragile amid geopolitical tensions. Apart from the bullish commentary on India's growth, RBI also talked about the risk of over-tightening. This raised expectations that the central bank won't hinder growth and might lower interest rates if needed.

The BSE Midcap and Smallcap indices also hit their fresh record highs of 35,523.69 and 41,548.63 respectively, during the session. The overall market capitalisation of the firms listed on the BSE rose to nearly ₹408.5 lakh crore on Thursday against ₹406.6 lakh crore in the previous session, making investors richer by about ₹1.9 lakh crore in a single session.