Nifty Below 24,450: Top 10 Reasons Behind Today’s Market Drop

The Indian stock market opened on a bearish note today, with the Sensex crashing over 800 points and the Nifty slipping below the 24,450 mark. Investor sentiment remains subdued as caution prevails ahead of the U.S. Federal Reserve’s December 18 decision. The uncertainty around rate cuts, coupled with declines in the banking and oil & gas sectors, weighed heavily on the indices. Broader global trends, corporate specific issues, and holiday season induced low trading volumes have further added to the downward pressure.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Overview of the Market News

The trading session on December 17 started on a negative note as investors turned cautious ahead of the critical U.S. Federal Reserve meeting, where a 25basispoint rate cut is highly anticipated, with odds pegged at 97% according to the CME FedWatch tool. At 10:30 AM, the Sensex plunged 830 points (1%) to 80,918, while the Nifty fell 254 points to 24,414. Financial and oil & gas stocks led the decline, with market heavyweights such as HDFC Bank, ICICI Bank, and Reliance Industries contributing significantly to the drop.

The India VIX, a gauge of market volatility, surged by nearly 6% to 14.8, indicating rising market anxiety. Sector wise, public sector banks, private financials, and oil & gas stocks faced intense selling pressure. Meanwhile, Nifty Media emerged as the sole bright spot, rising over 1%, driven by gains in PVR Inox, Zee Entertainment, and Nazara Technologies.

Top 10 Reasons for the Market Crash:

1. Fed Rate Cut Uncertainty:  

The upcoming Fed decision on December 18 has spooked investors. While a rate cut is expected, uncertainty about future rate cut policies keeps markets on edge.

2. Global Market Caution:  

Mixed cues from global markets, including Wall Street and AsiaPacific indices, mirrored investor nervousness. The Nasdaq hit a record high, but caution remains prevalent.

3. Decline in Financial Stocks:  

Financial heavyweights like HDFC Bank (0.8%), ICICI Bank, and Shriram Finance (0.5% to 2.5%) saw sharp declines, dragging down the indices.

4. Weak Oil & Gas Sector:  

Stocks such as RIL, ONGC, and BPCL fell by 0.5%1%, pulling the Nifty Oil & Gas index down by 0.4%. Global energy price volatility adds to the concerns.

5. HDFC Bank’s Regulatory Issue:  

HDFC Bank received a warning letter from SEBI over noncompliance in disclosure related to a senior employee's resignation, hurting sentiment.

6. Low Trading Volume:  

The holiday season has led to lower participation by institutional investors, making the market lacklustre and susceptible to swings.

7. Rising Volatility:  

The India VIX climbing to 14.8 reflects heightened fear and uncertainty, prompting investors to adopt a waitandwatch approach.

8. Pressure from FIIs and DIIs:  

Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) turned net sellers in the previous session, offloading shares worth ₹278.7 crore and ₹234.25 crore, respectively.

9. Technical Resistance Levels:  

On the technical front, Nifty faces resistance at 24,800 and 25,000. Until a breakout occurs, downward pressure is expected, with support at 24,400.

10. Global Economic Concerns:  

Attention is also focused on the Bank of Japan’s policy review (Dec 19) and the People’s Bank of China’s loan rate announcement (Dec 20), adding uncertainty to global economic outlooks.

Conclusion

The Indian stock market remains under pressure due to a combination of global economic uncertainty, weak performance in key sectors, and technical challenges. With the Federal Reserve meeting just around the corner and global volatility on the rise, investors are treading cautiously. Analysts expect this trend to continue until clear signals emerge regarding interest rates and economic policy. However, opportunities may still lie in selective sectors like public sector banks and housing finance companies, especially if rate cuts materialize. Investors are advised to adopt a buyondips strategy while maintaining strict stop loss measures to mitigate risks.