December 19: Indian share market opens in red as US Fed warns less rate cuts this year

Mumbai, Dec 19 (IANS) The Indian stock market opened in red on Thursday after the US Federal Reserve cut interest rates by 25 basis points, but warned that rate cuts may not come so easily in 2025 as anticipated earlier.

As Fed’s focus moves towards maximum employment and price stability, the FOMC halved the number of rate cuts expected for 2025.

“Post US markets sharp negative reaction to the overall commentary, all Asian markets have opened negatively as well,” said market experts.

At around 9:30 am, Sensex was trading at 79,158.53 after declining 1,023.67 points or 1.28 per cent, while the Nifty was trading at 23,892.4 after declining 306.45 points or 1.27 per cent.

The market trend remained negative. On the National Stock Exchange (NSE), 223 stocks were trading in green, while 2,029 stocks were in red.

Nifty Bank was down 783 points or 1.50 per cent at 51,356.55 Nifty Midcap 100 index was trading at 57,779.40 after dropping 943.85 points or 1.61 per cent. Nifty Smallcap 100 index was at 18,885.65 after dropping 344.70 points or 1.79 per cent.

In the Sensex pack, Infosys, HCL Tech, Asian Paints, Tata Steel, Tech Mahindra, Tata Motors, SBI, JSW Steel and Bajaj Finance were the top losers. Hindustan Unilever and ITC were the top gainers.

Contrary to expectations, the Fed's forecast for the upcoming rate trajectory has only two subsequent 25 basis point cuts for 2025. Earlier, four 25 basis point cuts were expected for next year.

"When valuations are high, the market needs only a trigger to correct sharply. This trigger was provided by the Fed guidance of fewer rate cuts in 2025, which went against market expectations," said experts.

"Even though the rate cut of 25 bp was in tune with the market’s expectation, the indication of only two cuts of 25 bp each in 2025 against market expectation of three or even four cuts spooked the market resulting in a sharp sell-off in Wall Street," they added.

The Dow Jones declined 2.58 per cent and closed at 42,326.87. The S&P 500 dropped 2.95 per cent to 5,872.20 and the Nasdaq declined 3.56 per cent to close at 19,392.69.

In the Asian markets, the markets of Jakarta, Bangkok, Seoul, Japan, China and Hong Kong were trading in red.

According to experts, sharp cuts in the market today will provide opportunities for investors to buy.

“The broader market will be impacted less despite high valuations since the FII impact will be negligible in this segment. Therefore, there can be a sharp bounce back in growth stocks in this segment,” they noted.

Foreign institutional investors (FIIs) sold equities worth Rs 1,316.81 crore in India on December 18, while domestic institutional investors bought equities worth Rs 4,084.08 crore on the same day.

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