Indian stock markets continued to face pressure on Friday, opening flat amid concerns related to Foreign Portfolio Investor (FPI) selling and the weakening Indian rupee. The Nifty 50 index opened at 23,960.70 points with a modest gain of just 9 points, while the BSE Sensex gained 0.15% to open at 79,335.48 points. Despite these minor gains, experts remain cautious as the global market sentiment has been impacted by the Federal Reserve’s actions.
Global Market Sentiment Affected by US Fed’s Decision
The unexpected decision by the US Federal Reserve to reduce its rate cut cycle has sent ripples through global markets. This decision, combined with ongoing FPI selling, has created challenges for the Indian market, making it difficult for any rally to gain momentum. Experts suggest that the chances of a year-end rally still exist, but the volatility in the market is likely to hamper any significant growth.
Ajay Bagga, a banking and market expert, explained, “Indian markets are trying to shake off the global ‘risk-off’ sentiment, but the FPI selling this week has jolted those efforts so far. We are still optimistic that we could see a short burst going into the year-end, but the volatility is making any rally fragile for now.” Bagga further compared US Fed Chairman Jerome Powell’s actions to the “Grinch who stole Christmas,” referring to the negative impact on market sentiment due to reduced rate cuts.
Sectoral Performance and Market Volatility
In terms of sectoral performance, Friday saw a recovery in Nifty IT, Nifty Media, and Nifty Pharma indices. However, most other indices continued to experience downward pressure. Of the 50 stocks in the Nifty 50 index, only 13 opened with gains, while the remaining 37 saw declines.
Analysts also pointed to technical indicators suggesting possible support for the Nifty around 23,870 points. Akshay Chinchalkar, Head of Research at Axis Securities, noted, “The support, near 23,870, is also the area where the 61.8% Fibonacci retracement of the November to December advance meets a rising 200-day average.”
Global Markets Mirror Indian Weakness
The weakness in Indian markets is not isolated. Asian markets also displayed lackluster performance on Friday. Japan’s Nikkei 225 index remained flat following the central bank’s decision to hold interest rates steady, while markets in Taiwan, South Korea, and Indonesia continued to experience selling pressure.
Despite these challenges, experts maintain hope for a possible rebound, especially if the market stabilises in the coming days.
With global markets reeling from the US Federal Reserve’s surprise rate decision and a continuation of FPI selling, Indian stock markets are facing significant headwinds. While some sectors show promise, the overall market remains fragile, and investors should remain cautious. The year-end rally may still be possible, but only if market conditions stabilise in the coming weeks.