Sensex Crashes 1,200 Points, Nifty Under 24,000 Amid Market Turmoil: Key Reasons Behind the Selloff

The Indian stock market continues its losing streak, with investors witnessing ₹13 lakh crore wiped out over four days.

December 19, 2024: The Indian stock market extended its losing streak on Thursday, December 19, with the benchmark Sensex plunging nearly 1,200 points and the Nifty 50 dropping to 23,870, marking a fourth consecutive session of losses. The market rout has resulted in investors losing a staggering ₹13 lakh crore over the last four days.

Also Read: US Federal Reserve Cuts Interest Rate by 0.25%: Markets React Sharply

On Thursday, the Sensex opened at 79,029.03 against its previous close of 80,182.20 and nosedived to 79,020.08, shedding 1,162 points. Similarly, the Nifty 50 began at 23,877.15 and declined by 329 points, closing at 23,870.30.

The market capitalization of BSE-listed firms took a major hit, dropping to ₹446.5 lakh crore from ₹452.6 lakh crore, a loss of nearly ₹6 lakh crore in just a few minutes of Thursday’s trade.

Why is the Indian Stock Market Falling?

Here are the key factors contributing to the ongoing market slump:

1. US Federal Reserve Outlook

The US Federal Reserve trimmed its benchmark interest rate by 25 basis points, aligning with market expectations. However, its cautious approach toward further rate cuts spooked global markets. The Fed revised its projection to just two rate cuts of 25 basis points by the end of 2025, falling short of market hopes for three or four reductions.

This announcement triggered a 3% decline in the S&P 500 and Nasdaq, while the US dollar surged to a two-year high. Asian markets followed suit, with Indian equities also bearing the brunt.

Also Read: India’s FY25 Fiscal Deficit Projected at 4.8% Amid Robust Tax Collections

2. Foreign Institutional Investor (FII) Outflows

Sustained selling by foreign institutional investors (FIIs) has intensified the market downturn. FIIs have offloaded over ₹8,000 crore worth of Indian equities in the last three sessions, driven by a stronger dollar, rising bond yields, and the Fed’s cautious stance on rate cuts.

3. Rupee Hits Record Low

The Indian rupee weakened to an all-time low of ₹85.3 per dollar, further denting market sentiment. A weak rupee discourages foreign investments, as it erodes returns when converted back into home currencies. Additionally, it fuels inflation by making imports costlier, leading to tighter monetary policies—factors that are negative for the market.

Also Read: UPI Processes Over 15,547 Crore Transactions Worth ₹223 Lakh Crore in 2024

Outlook

As the global economic landscape continues to evolve, the Indian markets are likely to remain volatile. The interplay between foreign capital flows, currency fluctuations, and central bank policies will be critical in shaping the near-term outlook.

Tags:

Sensex Crash, Nifty 50 Decline, Indian Stock Market, US Federal Reserve, FII Outflows, Indian Rupee, Stock Market Analysis, Inflation Impact, BSE Market Capitalisation, Global Markets, Financial News,

Misha Bhatia