Indian Stock Market Live: Sensex Crashes 1,200 Points Today

Market Reaction to Fed’s Hawkish Tone

The Indian stock market experienced a considerable crash today, with the Sensex plummeting by 1,200 points and the Nifty nosediving back to the 23,870 level. This sharp decline follows the US Federal Reserve’s hawkish tone at Wednesday’s FOMC meeting.

Despite the Fed trimming its benchmark interest rate by 25 basis points to 4.25-4.50%, its cautious outlook on future rate cuts has dampened market sentiment worldwide.

Foreign Capital Outflow

One of the primary reasons behind the market downturn is the sustained selling of Indian equities by foreign institutional investors (FIIs). Over the last three sessions, FIIs have sold off Indian equities worth over ₹8,000 crore amid a strengthening dollar and rising bond yields. “The external pressure on the rupee is becoming more intense due to high US interest rates,” noted HSBC.

Rupee at Record Low

The Indian rupee hit a historic low of 85.3 per dollar on Wednesday, further damaging market sentiment. A weak rupee discourages foreign investors from investing in the Indian market, leading to foreign capital outflows and additional pressure on the markets. “A weaker rupee often triggers foreign portfolio investor outflows,” explained V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Macroeconomic Headwinds

Fresh concerns have emerged over India’s deteriorating macroeconomic picture, affecting market sentiment. The country’s trade deficit widened to an all-time high in November, hitting a record $37.84 billion. Additionally, India’s Q2 GDP growth came in at the lowest in nearly two years, showing a slowdown for the third consecutive quarter, reports Mint.

Uncertainty Over Earnings Recovery

After weak Q1 and Q2 earnings of Indian corporates, there is uncertainty over the earnings recovery in the December quarter (Q3). While experts expect a recovery, they hint that a decent recovery could be expected only from Q4. “Unless we see a sharp recovery in earnings, which is not visible yet, we may see CY25 be muted from a stock price performance perspective,” said Santosh Kumar Singh, Fund Manager at Motilal Oswal Mutual Fund.

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