Why Sensex Fell Over 1,100 Points and Nifty Crashed Below 24,350 Today US Fed Jitters, Weak Rupee Among Key Factors

Why Sensex Fell Over 1,100 Points and Nifty Crashed Below 24,350 Today

US Fed Jitters, Weak Rupee Among Key Factors

Indian markets faced heavy selling pressure today, with the Sensex falling over 1,100 points and the Nifty slipping below the 24,350 mark. A mix of weak global cues, rupee depreciation, and sectoral weakness in finance, IT, and FMCG stocks triggered the broad-based decline. Investors are on edge ahead of key central bank policy decisions, both in the US and Japan, further weighing on sentiment.

Key Factors Behind Today’s Market Crash

1. US Federal Reserve’s Policy Decision

The market is cautious ahead of the US Federal Reserve’s interest rate decision scheduled for Wednesday. While a 25-basis-point rate cut is already factored in, the focus remains on Fed Chair Jerome Powell’s commentary regarding future monetary policy. Any deviation from a dovish stance could trigger further sell-off in global and domestic equities.

“Investors will carefully analyze Powell’s tone. Any hawkish signals could dampen hopes of further rate cuts, which is critical for market optimism,” noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2. Rupee Hits Lifetime Low

The Indian rupee hit an all-time low of 84.92 against the US dollar, driven by foreign fund outflows and record trade deficits. A weakened rupee increases imported inflation, impacting sectors like oil, metals, and consumer goods.

Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, remarked, “The rupee’s fall, particularly in the NDF market, was exacerbated by rising gold imports and widening trade deficits in November.”

3. Weak Foreign Institutional Investor (FII) Activity

Foreign Institutional Investors (FIIs) refrained from heavy buying, further denting market sentiment. On Monday, FIIs offloaded equities worth Rs 279 crore, reflecting a cautious stance.

“While midcap and smallcap stocks showed resilience, blue-chip stocks bore the brunt of FII selling pressure,” observed Ajit Mishra, Senior VP of Research at Religare Broking.

4. Selling in Blue-Chip Stocks

Heavyweights like Reliance Industries, HDFC Bank, Bharti Airtel, JSW Steel, and Titan were among the major drags on the Sensex. The sell-off in these stocks, which hold significant market weight, led to a sharp fall across indices.

5. Bank of Japan Policy Meeting Adds to Uncertainty

Investors are also watching the Bank of Japan’s policy meeting set for December 18-19. Any signal of an interest rate hike could further unsettle global markets. Japan’s policy move follows the Fed decision, which remains the primary driver of market direction this week.

Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, shared, “Caution will prevail until there’s clarity from the Fed and BOJ meetings. Markets are likely to consolidate in a broader range amid this uncertainty.”

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Global Market Cues

Asian markets echoed the weak sentiment, with Seoul, Shanghai, and Hong Kong ending lower, while Tokyo managed to stay in positive territory. Meanwhile, US markets remained mixed, offering limited support to domestic equities.

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Sectoral Impact

Major sectoral indices like Nifty Bank, Nifty Energy, and Nifty Infra fell between 1-1.5%, reflecting the broad-based nature of today’s decline.

Metal, FMCG, and IT sectors led the losses amid weak global demand and currency pressures.

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Conclusion

The combined impact of US Fed jitters, a falling rupee, FII outflows, and global uncertainty dragged the Sensex and Nifty lower today. Investors are likely to remain cautious until clarity emerges on central bank policy directions later this week.

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