By Vineet Kumar 
Sensex Slips 4000 Points, Nifty Below 23600: Decoding This Week’s Market Crash
The Indian stock markets ended the week on a sour note, with the Sensex and Nifty witnessing a sharp decline for the fourth consecutive session. On Friday, December 20, 2024, the BSE Sensex dropped by 4,092 points (4.98%) this week to hit a low of 77,875, while the NSE Nifty50 fell by 1,181 points (4.77%), touching a weekly low of 23,537.
On the last trading day, the Sensex closed at 78,041.59, down 1,176.46 points (1.49%), and the Nifty50 settled at 23,587.50, down 364.20 points (1.52%).
Let’s explore the key factors driving this market turmoil:
1. Foreign Institutional Investors (FII) Sell-Off
After a buying spree in early December, Foreign Institutional Investors (FIIs) have reversed their strategy. This week alone, FIIs sold equities worth ₹12,230 crore, creating pressure on large-cap stocks, especially in the financial sector.
“The FII selling spree has dragged down market sentiment, impacting key large-cap stocks,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2. Global Market Weakness
Global cues added to the bearish sentiment. Major indices in the Asia-Pacific region ended in the red, with Japan’s Nikkei down 0.29%, China’s CSI 300 slipping 0.45%, and Hong Kong’s Hang Seng falling 0.16%.
European markets also experienced a rout:
Germany’s DAX: Down 1.13%
UK’s FTSE 100: Down 0.73%
France’s CAC 40: Down 1.17%
The global market sell-off left Indian equities exposed to further downside risks.
3. Rupee Depreciation
The Indian rupee breached the crucial 85-per-dollar mark this week, rattling market confidence. A weaker rupee not only makes Indian equities less attractive to foreign investors but also raises concerns about inflation.
“The rupee’s weakness has been a major factor denting sentiment. A strong dollar is pushing FIIs away from Indian markets,” said independent market analyst Ambareesh Baliga.
4. Hawkish Commentary by the US Fed
While the US Federal Reserve reduced interest rates by 25 basis points, Chair Jerome Powell’s remarks suggested caution about future cuts. With only two rate cuts expected in 2025 (down from an earlier projection of four), global markets turned jittery.
This cautious stance has further weighed on the Indian markets, dragging both Sensex and Nifty lower.
5. Valuation Concerns
According to a report by Goldman Sachs, weak earnings growth and stretched valuations are expected to keep Indian markets range-bound for the next three months. Additionally, uncertainties around the incoming Trump administration in the US have only added to market volatility.
Outlook for Investors
The ongoing sell-off reflects a combination of global headwinds, weak FII sentiment, and valuation worries. While these short-term corrections may seem unnerving, long-term investors could view this as an opportunity to accumulate quality stocks at attractive levels.
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Keywords: Sensex, Nifty, market crash, FII sell-off, rupee depreciation, global markets, US Fed, valuation concerns
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