The Indian stock market recorded its sharpest weekly decline in two-and-a-half years, as bearish sentiments prevailed, driven by weak global cues and foreign investor outflows. Key indices Sensex and Nifty plunged, erasing gains from the past four weeks and wiping out ₹18.43 lakh crore in investor wealth.
Markets Tumble Amid Global Pressure
Domestic benchmarks faced relentless pressure, with the Sensex shedding 4.98% to close below the critical 80,000 mark at 78,041.59, and the Nifty dropping 4.77%, falling below its 200-day moving average for the first time in a month. The broader indices fell over 3.5%, while Bank Nifty slid 5.27%, reflecting heightened risk aversion following the US Federal Reserve’s hawkish tone.
Foreign institutional investors (FIIs) pulled out over ₹15,828 crore last week, with profit booking ahead of Christmas and year-end holidays compounding market woes. Conversely, domestic institutional investors (DIIs) provided some cushion, purchasing ₹11,874 crore during the same period.
Sectoral Struggles
Most sectors ended the week in the red, with metals, energy, and banking suffering the steepest losses. Pharma emerged as the only sector to buck the trend, displaying resilience amidst broader market turmoil.
Key Triggers for the Week Ahead
- IPO Action:
- Unimech Aerospace IPO will open for subscription on December 23, with other IPOs like Transrail Lighting, DAM Capital Advisors, and Mamata Machinery closing their bidding this week.
- Eight major listings, including Transrail Lighting and Concord Enviro, are set to debut on December 27.
- Global Factors:
- US bond yields, crude oil prices, and global economic data, including US jobless claims and durable goods orders, will influence market direction.
- The “Santa Effect” was absent this week, as heavy profit booking dragged global markets.
- Corporate Action:
- Vedanta shares will trade ex-dividend, while NMDC will trade ex-bonus. Mazagon Dock Shipbuilders will trade ex-split starting December 23.
- Crude Oil Prices:
- Brent crude ended last week at $72.94 per barrel, with muted global demand. Back home, crude oil futures closed at ₹5,944 per barrel on the MCX.
- FII Activity:
- High US bond yields and a strengthening dollar remain deterrents for FIIs, with their selling activity expected to persist until stabilization in global markets.
Technical Outlook
The Nifty has breached critical support levels, closing near 23,600. A break below the November low of 23,263 could accelerate the downward trend, with the next key support around 22,700. Resistance is expected in the 24,000–24,400 zone.
Bank Nifty closed below its 21-week EMA at 50,800, with significant support at 50,200 and 49,800. Resistance lies at 51,000–51,200, and a breakout may trigger a recovery towards 51,900. However, the overall sentiment remains bearish, with traders adopting a “sell-on-rise” strategy.
Outlook
Despite the steep sell-off, market experts remain cautiously optimistic, citing domestic stability and technical corrections as potential catalysts for a rebound. However, persistent FII outflows, weak global cues, and volatility driven by derivative expiries are likely to keep markets under pressure in the near term.
Investors are advised to adopt a cautious stance, focus on risk management, and monitor global and domestic developments closely.
