Frontline indexes Nifty and Sensex plunged for the fourth straight day on December 19, losing more than three percent of their value over the week and wiping out more than Rs 10.5 lakh crore in investor capital.
Whereas the Sensex plummeted 1,000 points, the Nifty 50 lost the 24,000 symbol. Interestingly, the Nifty 50 has increased by just 1.8% on both counts, giving the same gains over the last month as it did over the last six months.
When it closed, the Nifty 50 was down 247 points, or 1%, at 23,952. In a similar vein, the 30-share Sensex went down 964 points, or 1.2 percent, to close at 79,218. Experts had expressed apprehension about the Nifty breaking the 24,000 barrier. The December series’ low, 23,923, was the next support level, though, and it was defended by bulls.
The Federal Reserve increased its 2025 inflation projection from the September estimate of 2.1 percent to 2.5 percent with the revision. Additionally, the dot plot showed that, rather than the expected 75–100 basis point rate cuts, the easing cycle will only result in two rate cuts next year.
Due to the Federal Reserve’s aggressive stance, gold prices also fell 2% in trading. Conversely, the US Dollar Index reached a two-year high of 108.3, and the US 10-year yield increased to 4.45 percent.
Losses were contained by the wider markets, as the Nifty Smallcap 100 index dropped about half a percent and the Nifty Midcap 100 index dropped 0.3 percent. The sectors that saw the worst losses were tech, metal, and banking stocks.
The session saw some of the largest losses in technology equities, including Infosys and LTIMindtree. A higher interest rate regime in the US causes bond rates to spike and strengthens the dollar, which raises the cost of IT services for US clients and may reduce demand because the domestic IT sector is highly dependent on services exports.
