Last Updated:December 17, 2024, 12:35 IST

Stock Market Crash: With global uncertainties and domestic factors such as a weak rupee and FII outflows persisting, markets are likely to remain volatile in the near term.

Global markets remained under pressure, contributing to the weakness in Indian equities. (Representative image)

Stock Market Crash: The Sensex and Nifty witnessed a sharp decline of over 1 percent on December 17 as investor sentiment turned cautious ahead of the US Federal Reserve’s interest rate decision on Wednesday. Heavy selling pressure in finance, metal, FMCG, and IT shares, along with weak global cues and a depreciating rupee, added to the market woes.

The BSE Sensex plunged 1,015.64 points, or 1.2 percent, hitting an intraday low of 80,732.93, while the NSE Nifty fell below the 24,400 mark, losing 284 points during the session.

According to Moneycontrol, several key factors, including global economic uncertainties, fluctuations in commodity prices, and concerns over interest rate hikes by central banks, have contributed to today’s significant market crash, with investors reacting to a combination of domestic and international pressures that have led to widespread sell-offs across major indices.

Key Factors Driving Today’s Stock Market Crash

1. US Fed Jitters

Investors are keeping a close eye on the US Federal Reserve’s interest rate decision scheduled for Wednesday. Markets have already factored in a 25 basis points rate cut, but investor focus will shift to Fed Chair Jerome Powell’s commentary for future rate guidance.

“Any departure from a dovish commentary will be negative for markets,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2. Rupee Hits All-Time Low

The Indian rupee fell to a new lifetime low of 84.92 against the US dollar on December 17, impacted by foreign fund outflows and weak domestic equities.

“The rupee fell in NDF (Non-Deliverable Forward) markets after a record trade deficit for November, mainly due to increased gold buying,” noted Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

3. Lack of Fresh FII Buying

The absence of fresh buying by Foreign Institutional Investors (FIIs) further dampened sentiment. FIIs offloaded equities worth Rs 279 crore on Monday, extending their cautious stance.

“It seems FIIs are continuing their selling today, as midcap and smallcap indices are still holding ground,” commented Ajit Mishra, Senior Vice President – Research at Religare Broking.

4. Selling in Blue-Chip Stocks

Heavy selling in index heavyweights dragged the broader markets lower. Stocks such as Reliance Industries, Bharti Airtel, Nestle, Larsen & Toubro, Bajaj Finserv, HDFC Bank, JSW Steel, and Titan were among the major laggards from the 30-share Sensex pack.

5. Bank of Japan Policy Meet Prompts Caution

Investors are also awaiting the outcome of the Bank of Japan (BOJ)’s final policy meeting for the year, scheduled for December 18-19. The BOJ is expected to deliberate on raising short-term interest rates from the current 0.25 percent.

The BOJ’s decision follows the Fed’s outcome, which markets anticipate will include rate cuts.

Global Markets in Focus

Global markets remained under pressure, contributing to the weakness in Indian equities. Elsewhere in Asia, Seoul, Shanghai, and Hong Kong traded lower, while Tokyo managed to stay in positive territory. On Wall Street, indices closed mostly higher on Monday.

“It’s desirable for the BOJ to hold off on raising rates until the economy recovers a bit more,” Reuters quoted a senior Japanese government official.

Outlook: Cautious Sentiment to Continue

“We expect markets to consolidate within a broad range as sentiments remain cautious ahead of the US Fed and Bank of Japan’s interest rate decisions,” said Siddhartha Khemka, Head – Research, Wealth Management at Motilal Oswal Financial Services Ltd.

With global uncertainties and domestic factors such as a weak rupee and FII outflows persisting, markets are likely to remain volatile in the near term.