Indian benchmark indices Sensex and Nifty were trading in the red in early trade on December 15, snapping a two-session gaining streak amid broad-based selling. This came as falling rupee, weak global cues and various other factors dampened investor sentiment.
Sensex fell more than 320 points (around 0.4 percent) to 84,944, while Nifty 50 fell around 112 points (0.4 percent) to 25,935, as seen at 9.50 am.
Barring the Nifty Media index, all other sectoral indices were lower and the Nifty Auto, the Nifty Realty and the Nifty Oil & Gas index fell around 1% each. Among the Nifty Media’s constituents, shares of PVR INOX, DB Corp., and Sun TV Network rose 2-4%. Automobile companies were hit hard in early trade, with shares of Mahindra & Mahindra and Eicher Motors falling 1.5% each. Among the Nifty 200 constituents, shares of Hyundai Motors fell over 2%.
Here are some of the key factors behind the downturn in the markets today:
Falling rupee:
Rupee hit a fresh record low on Monday, sliding down to 90.6 against the US dollar. This marks the third consecutive session when the Indian currency hit a fresh low. India and US not reaching a trade deal yet, weak capital flows and more have led to the fall in rupee.
According to Vinod Nair, Head of Research at Geojit Investments, the markets are likely to remain sensitive to rupee stability, FII flow trends, and clarity on trade agreements, alongside global cues from the central banks’ meetings.
“A major drag on the market continues to be the elusive US-India trade deal which is impacting India’s exports to the U.S., widening of trade deficit and continuous depreciation in the rupee,” said VK Vijayakumar, chief investment strategist at Geojit Investments.
Persistent FII outflows:
Indian markets have continued to see strong foreign outflows. Foreign institutional investors remained net sellers on Friday, selling equities worth Rs 10,719.95 crore, as against purchases worth Rs 10,323.69 crore, according to NSE.
Although FIIs remained net sellers, domestic investors remained net buyers in the market. “The negative opening is largely driven by renewed selling pressure in global markets, persistent foreign institutional outflows, and continued rupee weakness against the US dollar. While domestic fundamentals remain stable, near-term sentiment appears fragile, suggesting a defensive start to the session,” said Choice Broking.
Weak global cues:
Global markets ended the session on a negative note on Friday. The Nasdaq Composite fell 1.6 percent, extending the recent tech-led pullback. The S&P 500 fell about 1 percent, a day after touching record highs, while the Dow Jones Industrial Average declined 0.5 percent.
Japan’s central bank is likely to increase its interest rates this week as big Japanese manufacturers’ business sentiment hit a four-year high in the three months to December. “All in all, the tankan backs up dominant market views the BOJ will raise rates in December. Unless a huge shock hits the economy or markets, it is likely to proceed with a hike,” Reuters quoted Masato Koike, senior economist at Sompo Institute Plus, as saying.
As a result of the rising expectations of a rate hike by Bank of Japan, Nikkei 225 fell around 800 points (nearly 1.6 percent) on Monday morning.
Weakness on Wall Street and across Asia has weighed on early sentiment, as investors reassess stretched valuations in technology stocks. “Global signals remain mixed, keeping early sentiment subdued, yet low volatility and improving risk appetite may help the index find its footing quickly. As trading unfolds, gradual buying interest is expected to emerge in key cyclicals such as metals, capital goods, and select financials, potentially lending support to the broader market. Intraday dips are likely to attract buyers, especially if heavyweight stocks maintain momentum,” said Aakash Shah, Technical Research Analyst at Choice Equity Broking.
China and Hong Kong stocks slipped on Monday as a slew of lacklustre economic data and mounting default risks by property developer Vanke weighed on market sentiment.
New home prices extended declines last month, China’s factory output and retail sales grew at their weakest pace in over a year, and new bank loans rose less than expected.
What should investors do?
Given the current setup, traders should adopt a cautious buy-on-dips approach strictly near support levels, with tight stop-losses, said Choice Broking. “Aggressive long positions should be avoided until key resistance levels are decisively breached, while partial profit booking on pullbacks remains prudent in this range-bound and volatile environment,” it added.
On the technical front, Sensex faces immediate resistance at 85,700–85,800, a zone that could cap early upside attempts, Shah said, adding that support around 84,700–84,800 may provide a cushion in case of pullbacks. “Overall, the Sensex is anticipated to deliver a constructive, upward-tilted session, with resilience and sectoral rotation favouring a continuation of its short-term positive trend despite lingering macro uncertainties,” he said.
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With inputs from Reuters
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