The US Federal Reserve recently announced a 0.25 percent interest rate cut. However, after signaling a smaller cut in the coming year, stock markets around the world, including the US, plunged. On Thursday, the Sensex fell by 964 points, while the Nifty dropped by 247 points. This marked the fourth consecutive day of decline for the Indian stock market this week. The Sensex lost 2,915 points, and investors saw their wealth diminish by approximately Rs 10 lakh crore due to the downturn.
The rate cut was expected to have positive effects, especially with inflation decreasing in India. However, Federal Reserve Chairman Jerome Powell's statement that the US would aim to keep interest rates stable in the future caused global stock markets to tumble.
Sensex Drops Below 80,000
The US decision led the Sensex to fall below the 80,000 marks on Thursday. There was significant selling pressure on shares of banks, metals, and IT companies. In November, the Sensex had dipped to 77,000, but it later rebounded to 82,000. Foreign institutional investors sold shares worth Rs 1,316.81 crore on Wednesday.
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Five Main Reasons for the Decline
- The US signaled that it would keep interest rates unchanged in the new year.
- The Indian Rupee fell to a low of Rs 85.08 against the dollar.
- Selling by foreign institutional investors continued.
- Quarterly results from major companies remained disappointing.
- Geopolitical tensions negatively impacted the stock market.
Sensex Performance in December
December 13: 82,133December 16: 81,748December 17: 80,684December 18: 80,182December 19: 79,218