• The Indian stock market dipped due to weak global cues and anticipation of the US Federal Reserve meeting.
• The Sensex and Nifty closed in the red, with heavy selling seen in several sectors.
• The rupee hit an all-time low against the dollar, and India's trade deficit for November was the highest on record.
• The market's future trajectory will be significantly influenced by the US Fed's policy statement and interest rate decisions.

The Indian stock market experienced a downturn on Wednesday, with the Sensex and Nifty closing in the red. This was largely due to weak global cues and market sentiment remaining cautious ahead of the key US Federal Reserve meeting. The Sensex settled at 80,182.20, down by 502.25 points, or 0.62 per cent, and the Nifty ended at 24,198.85, down by 137.15 points, or 0.56 per cent.

The US Federal Reserve was set to release its policy statement late on Thursday during the Federal Open Market Committee (FOMC) meeting. The market was eagerly awaiting the decision of the US central bank, with investors anticipating a potential lowering of the benchmark interest rate by 25 basis points. This would mark the third consecutive rate cut, bringing the federal funds rate to a target range of 4.25%-4.5% from the current 4.5%-4.75%.

The Indian market was experiencing a breakdown in the early Santa Claus rally, with the impact being more pronounced in India compared to developed markets due to the rapid appreciation of the dollar. Market sentiment remained cautious, further influenced by India's premium valuation, which was significantly above the current earnings growth trajectory that had slowed over the last two quarters.

Impact on Sectors and Currency

Heavy selling was seen in the media, PSE, PSU Bank, financial service, metal, private bank and commodities sectors of the Nifty at the end of trading. On the Bombay Stock Exchange (BSE), 1,447 shares ended in green and 2,558 in red, whereas there was no change in 94 shares. On the sectoral front, buying was seen in the pharma, healthcare and IT sector of Nifty.

In the Sensex pack, Tata Motors, Power Grid, NTPC, JSW Steel, ICICI Bank, L&T, Bajaj Finance, HDFC Bank, Axis Bank and SBI were the top losers. While TCS, Sun Pharma, Tech Mahindra, HCL Tech, M&M, ITC and Infosys were the top gainers. The rupee closed at 84.95, which is its all-time low against the dollar.

Looking Ahead: Market Predictions and Influences

The Indian stock market has been on a downward trend for the third consecutive session as investors awaited the Federal Reserve's monetary policy decision. The Sensex remains nearly 6,000 points below its all-time high of 85,978 points. Market sentiment remains cautious ahead of the FOMC meeting and potential policy and tariff shifts from the incoming US administration.

India's merchandise trade deficit for November stood at $37.84 billion, driven by a surge in imports relative to exports. This is reportedly the highest monthly trade deficit on record. Kotak Securities attributed the market decline to profit booking.

The Nifty 50 fell below the 20-day SMA, indicating further weakness from the current levels. Most sectoral indices suffered losses on Wednesday. The Nifty Media index cracked over 2 per cent, while the Nifty PSU Bank index fell 2 per cent. Nifty Bank, Financial Services, Private Bank and Metal indices suffered losses of over 1 per cent each. On the other hand, the Nifty Pharma index rose by over a per cent. Nifty IT, too, rose with mild gains.