• The Indian stock market fell by over 1.4 percent, mirroring a global selloff after the US Federal Reserve indicated slower future interest rate cuts.
• The Sensex and Nifty, key indices of the Bombay Stock Exchange and National Stock Exchange respectively, both experienced significant drops.
• The market downturn was particularly noticeable in the realty and PSU bank sectors, with the Nifty Bank and Nifty Midcap 100 index also seeing declines.
• The market's reaction to the US Federal Reserve's slower pace of interest rate cuts underscores the importance of international monetary policy in shaping market sentiment.

The Indian stock market experienced a significant downturn, losing over 1.4 percent on Friday. This mirrored a global selloff, following the US Federal Reserve's indication of a slower pace of interest rate cuts in the future. The Sensex, a benchmark index of the Bombay Stock Exchange (BSE), closed at 78,041.59, down by 1,176.46 points or 1.49 percent. Concurrently, the Nifty, the National Stock Exchange's key index, ended at 23,587.50, down by 364.20 points or 1.52 percent.

The market's downturn was particularly noticeable in the realty and PSU bank sectors of Nifty. Krishna Appala of Capitalmind Research noted that the markets are becoming increasingly stock-specific while the broader indices take a pause. He attributed the current sentiment to several key events, including the upcoming US Presidential regime change with Donald Trump set to take office in January, and the Indian Union Budget announcement just weeks away.

Sectoral Impact and Market Performance

The Nifty Bank ended at 50,759.20, down by 816.50 points, or 1.58 percent. The Nifty Midcap 100 index closed at 56,906.75 at the end of trading after dropping 1,649.50 points, or 2.82 percent. Selling was seen in Nifty's Auto, IT, Fin Services, Pharma, FMCG, Metal, Media, Energy, Private Bank, Infra, Commodities, and PSE sectors.

On the BSE, 1,057 shares ended in green and 2,935 in red, whereas there was no change in 93 shares. In the Sensex pack, Tech Mahindra, IndusInd Bank, Axis Bank, M&M, Tata Motors, L&T, SBI, TCS, UltraTech Cement, Power Grid, Reliance, and Tata Steel were the top losers. Nestle India and Titan were the top gainers.

Global Factors and Market Sentiment

The slower-than-anticipated rate cuts by the US Fed have adversely affected global market sentiment. This bearish outlook is particularly impacting the domestic market. Meanwhile, the rupee traded with strength at 85.02 for the day, gaining 0.12 as it bounced back from oversold levels near 85.10.

This week's market crash is the biggest in two years, wiping Rs 17 lakh crore m-cap from BSE-listed firms. The Federal Reserve's cautious stance and a shallower rate cut trajectory for 2025 intensified FII selling in the domestic market. The Nifty 50, which also happened to drop around 5 percent this week, slipped below its 200-day exponential moving average (DEMA) to fall back into the correction territory. This means that the Nifty 50 is now down over 10 percent off its record high.

The Nifty Midcap 100 plunged 2.8 percent and the Nifty Smallcap 100 was down 2.2 percent. With this, the Nifty Midcap 100 and Smallcap 100 indices continued its downward journey for the fourth day on the trot. For the week, both the indices were down around 3.5 percent each.