Indian Stock Markets Slide Amid Federal Reserve's Anticipated Policy Decision

For the third consecutive session, Indian stock indices declined as investors anxiously awaited the Federal Reserve's policy decision. Sensex and Nifty saw decreases, closing at 80,182.20 and 24,198.85 points respectively. Market caution prevails due to US policy uncertainties and India's widened trade deficit impacting sentiment.

Indian stock indices slumped for the third straight session on Wednesday, influenced by investor anticipation of the Federal Reserve's upcoming monetary policy decision. The Sensex closed lower at 80,182.20 points, a fall of 502.25 points or 0.62%, while the Nifty slipped to 24,198.85 points, dropping 137.15 points or 0.56%.

Currently, the Sensex is about 6,000 points shy of its all-time high of 85,978 points. "Market sentiment remains cautious ahead of the FOMC meeting and potential policy and tariff changes under the new US administration," stated Vinod Nair, Head of Research at Geojit Financial Services.

In a shift from its recent trend of stable interest rates over eight meetings, the US Federal Reserve has enacted a cumulative 75-basis-point rate cut over its last two reviews in September and November. "Investors are also wary due to India's premium valuation, which is significantly higher than the current earnings growth trajectory that has decelerated over the last two quarters," Nair added.

Nair also pointed out that India's expanded trade deficit for November, which reached USD 37.84 billion, has further dampened domestic sentiment. This marks the highest monthly trade deficit on record, driven by a surge in imports outpacing exports.

Kotak Securities has linked today's market declines to profit booking. "Technically, the market faced selling pressure at higher levels again," commented Shrikant Chouhan, Head of Equity Research at Kotak Securities. Last week, Indian equity markets rebounded sharply in the second half on Friday, ultimately closing the week with modest gains. (ANI)

(With inputs from agencies.)