Market Insight, 19 December 2024

Thursday, 19 December 2024

Time : 8 AM IST

Insights :

Let’s understand yesterday’s market:

1. Nifty fell by 137 points, closing at 24,198.
2. The only two sectors in green were Nifty IT and Nifty Pharma, benefiting from the rising dollar index. This is favorable for export-driven companies but not ideal for the broader markets.
3. Rising US bond yields are a concern for emerging markets like India, as they may impact Foreign Institutional Investor (FII) inflows.
4. Nifty slipped below the recent low of 24,180 during the session but managed to close above that level.

Global Cues:

5. US markets closed with significant losses:
   • Nasdaq: -3.6%
   • S&P 500: -2.9%
   • Small-cap index Russell 2000: -4.4%
   • Dow Jones: -2.5%
6. The Federal Reserve announced a 25 bps rate cut, as expected. However, the future rate outlook was disappointing, with the Fed indicating only two cuts in 2025, down from the previously projected four cuts.
7. Following the Fed’s announcement:
   • US bond yields rose by 11 bps, reaching 4.51%.
   • The dollar index surged by 1.16%, standing at 108.
   • US VIX skyrocketed by 74%, closing at 27.62.
8. Adding to the uncertainty, Trump’s comments on reciprocal taxes for India created additional concerns.

Asian Markets and GIFT Nifty:

9. Asian markets are trading in red, reacting to the sharp fall in US markets.
10. GIFT Nifty is indicating a gap-down opening of 330 points for Indian markets.

FIIs and DIIs Activity:

11. Yesterday, FIIs were net sellers of ₹1,300 crores, while DIIs were net buyers of ₹4,000 crores. Notably, FIIs have been building short positions and unwinding longs over the past few days, anticipating the Fed’s outcome.

Today’s Outlook:

12. Increased volatility is expected in today’s session due to the weekly expiry.
13. Based on GIFT Nifty indications, the Nifty might test the support level of 24,150 at the opening. The next support is at 23,800, which coincides with the 200-day moving average.
14. Overall, global cues remain negative, pointing to a bearish short-term outlook for the markets. Upside potential is limited.