Hawkish Fed dealt a severe blow to market sentiment on December 15 as equity benchmarks the Sensex and the Nifty fell over a percent lower due to a widespread selloff.
The domestic market mirrored weak global sentiment after the US Federal Reserve lifted rates on expected lines by 50 bps but stated that the central bank was not likely to take a pause on rate hikes anytime soon.
"US central bankers see the policy rate, now in the 4.25-4.5 percent range after a 50-basis-point increase on December 14, rising to 5.1 percent by the end of next year, according to the median estimate in the Fed's quarterly summary of economic projections published at the end of its two-day meeting. The rate is then seen dropping to 4.1 percent in 2024, the projections show, again higher than estimated just three months ago," reported Reuters.
Key highlights of the day
Sensex opened 148 points lower at 62,530.07 and remained in the red throughout the session, falling as many as 962 points to an intraday low of 61,715.61. It closed 879 points, or 1.40 percent, lower at 61,799.03 while the Nifty50 closed with a loss of 245 points, or 1.32 percent, at 18,414.90.
The Midcap index ended 1.05 percent lower while the Smallcap index fell 0.61 percent.
The overall market capitalisation of BSE-listed firms dropped to ₹288.48 lakh crore from ₹291.25 lakh crore in the previous session, making investors poorer by ₹2.8 lakh crore in a single session.
As many as 154 stocks, including SBI, Apollo Tyres, Bank of India, L&T Finance Holdings and Federal Bank, hit their 52-week highs in intraday trade on BSE.
Top Sensex gainers and losers
In the 30-share pack Sensex, only two stocks - Sun Pharma (up 0.08 percent) and NTPC (up 0.06 percent) - ended in the green.
Shares of Tech Mahindra (down 3.98 percent), Infosys (down 2.59 percent) and Titan (down 2.57 percent) ended as the top laggards.
Sectoral picture
Each and every sector suffered losses on December 15, with Nifty IT falling 2.11 percent and Media ending with a loss of 2.08 percent. The Nifty PSU Bank index snapped its three-day winning run, ending 1.88 percent lower.
Nifty Bank fell 1.25 percent. Metal, Financial Services, Private Bank, Realty and Consumer Durables also fell over a percent each.
Experts take
Vinod Nair, Head of Research at Geojit Financial Services pointed out that the Fed startled the market by maintaining its hawkish tone, as investors were expecting a softer approach after the release of better-than-expected inflation numbers.
Nair said the IT stocks led to pessimism in the domestic market as recession fears grew in the global economies following the Fed’s comments. The market now awaits the BOE and ECB decisions, which are likely to follow a half-point hike.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said the US Fed effect led to a massive selloff in the markets as banking, IT, metal and realty stocks received severe pounding at the hands of investors.
"Markets were disappointed after the Fed indicated that the rate hike regime would continue next year, which further accentuated the already fragile market sentiment prompting investors to trim their equity exposure," said Chouhan.
Technical views
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas observed that with a minor degree bounce in the last couple of sessions, the Nifty had retraced 61.8 percent retracement of the previous decline. The index formed a distribution near the key Fibonacci level throughout the day on December 14. Thereon the index nosedived on December 15.
"Structurally, the index is moving down towards the lower end of the short-term consolidation range i.e. 18,300. Buying support can be expected again near 18,300. Overall, the short-term consolidation range of 18,300-18,700 remains intact," said Ratnaparkhi.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.
